In re: Daily deals and the law

Interesting post over at TechCrunch discussing a number of legal issues touching on daily deals (and how they may be violating laws, especially consumer protection).  Like any area that is new and evolving its unclear what daily deals (Groupon, Living Social, Faveroo here in Columbus among others) are and you might be able to fit them under gift card laws, which the post at TechCrunch points out might put them at some odds with various state laws (Groupon does use some vague term language to hedge these issues, but they are setting up local merchants with some sticky issues).

I’ve been looking into issues like gift cards, bankruptcy, sales tax, and alcohol regulations. These might all sound esoteric and not really worthy of discussion, but the outcomes can significantly affect the value proposition to the consumer, merchant and the deal provider


What’s the correct sales tax on a $51 purchase with a $50 Groupon that someone bought for $25 in a state with a 5% tax rate? The possible answers are 5 cents, 68 cents, $1.30 and $2.55. That’s based on a taxable value of $1 (amount paid at point of sale), $13.50 (amount merchant actually gets), $26 (total amount consumer paid) and $51 (total face value of the transaction). I find that most businesses pick either extreme.

See TechCrunch

So while some of these might sound a bit bland to some, they could actually pose a whole host of issues to the rapidly expanding industry.  As someone who has missed the expiration on some of the deals I bought here, I wouldn’t mind having the longer date gift card laws often require, but of course these might cause companies to not want to get into the deals to start with.


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