Connecticut Questions Groupon About Expiration Dates

Among the things that keep Connecticut Attorney General George Jepsen awake at night is whether Groupons are gift cards or coupons.

What's the difference?

The difference is that under state law in Connecticut and many other states, gift certificates can't carry an expiration date, while coupons can.

To be a bit more explicit, consumers pay for gift cards while coupons are generally free. Looked at in that light, it would seem that a Groupon is a gift card and that the expiration dates most Groupons carry are at worst illegal and at best not binding.

Jepsen has written to Andrew Mason, the chief executive of the Chicago-based company, asking for more information about Groupons. Specifically, the AG asked the company to explain the terms under which Groupons are sold to and redeemed by consumers, how much revenue those sales generate in Connecticut and how frequently expiration dates are imposed on the sale of goods and services at a discount.

“It appears that what Groupon, Inc. sells or offers may fall within the definition of a gift certificate under Connecticut law,” Jepsen said, noting that Connecticut law prohibits gift certificates from being sold or issued subject to an expiration date.

“Discounts on goods and services are good for Connecticut consumers, but only if they are getting the benefit of what they are entitled to under Connecticut law,” Jepsen said. “I have not prejudged Groupon or reached any conclusions. I am hopeful that any issues can be resolved through discussion and cooperation.”

Connecticut may be the first state to raise questions about the Groupon sales, although many states have laws prohibiting or limiting gift card expirations. A number of private civil suits have been filed nationally challenging the expiration dates.

In a written statement, Groupon said it would try to help Jepsen "understand our business model."

The company was asked to provide the information requested by early next month.