Groupon, Nordstrom Sued for Allegedly Misleading Customers

Photo: Getty Images
A Nordstrom store in Chicago, IL.

In a lawsuit that will no doubt have the plethora of successful flash-deal Web sites consulting their lawyers, Groupon and Nordstrom are being sued for allegedly misleading their customers by placing expiration dates on their gift certificates.

The suit, while filed against both companies, is primarily aimed at Groupon; the Web site’s recent deal with Nordstrom Rack serves as an example of the issue. California Civil Code prohibits the sale and issuance of gift certificates with expiration dates, as does the Credit Card Accountability Responsibility and Disclosure Act and the Electronic Funds Transfer Act.

“Groupon’s systematic placement of expiration dates on its gift certificates is deceptive and harmful to customers,” reads the court document, filed in California on January 11. The plaintiff, Anthony Ferreira, is seeking damages and equitable relief for himself “and all others similarly situated.”

“Groupon and its retail partners, including Nordstrom, bank on the fact that consumers often will not manage to redeem ‘groupon’ gift certificates before the limited expiration period—therefore, many consumers are left with nothing, despite already having paid for the particular service or product,” the filing continues. “Accordingly, Groupon and its retail partners reap a substantial windfall from the sale of gift certificates that are not redeemed before expiration, which is precisely the type of harmful business conduct that both Congress and the California State Legislature intended to prohibit.”

“Plaintiff, like many unsuspecting consumers nationwide, fell victim to Groupon’s deceptive and unlawful conduct.”

Nordstorm has not yet responded to our request for comment, though according to Luxury Daily, New York attorney Andy Lustigman (who is not affiliated with the lawsuit) said the department store doesn’t have much to worry about.

“It’s not a program that Nordstrom has created, so I doubt that anyone will think badly of them,” he said. “This should be a lesson that brands shouldn’t accept what may have been an advertiser’s representation as to the legality of the practice.”