LivingSocial Hit With Class Action Lawsuit

A class action lawsuit has been launched against LivingSocial.com in Seattle District Court, claiming the popular online gift certificate seller violates consumer protection laws by printing expiration dates on its certificates and bilking consumers out of the full value of the certificates.

Like Groupon.com, LivingSocial.com is a social coupon site that sells deals for local restaurants, retailers, spas and other businesses throughout the country at a discounted rate. The LivingSocial class action lawsuit alleges the online discounter illegally places expiration dates on the purchased gift certificates in violation of state and federal law. Washington state law prohibits expiration dates on gift cards or certificates, with a few exceptions, and federal law prohibits the sale of gift certificates that expire within five years of issuance. These consumer-protection laws were created to prevent the sale of gift certificates loaded down with restrictions that make it difficult for consumers to use them and/or obtain their full value.

According to the LivingSocial.com class action, LivingSocial tries to get around these laws by deceiving customers into believing they must use their purchased gift certificates by the expiration date printed on them, or lose the deal and the money they paid to purchase it. If consumers read the fine print, however, they learn that the promotional portion of the voucher – the full face value of the certificate – expires on the expiration date, while the “paid portion”  — the amount paid for the certificate – expires five years after the voucher was purchased.

LivingSocial also notes in the fine print that these restrictions are lifted to the extent required by law, and that merchants are “obligated to honor the voucher in compliance with the law.” The class action lawsuit argues, however, that most consumers and merchants are not aware of the law and believe the expiration dates printed on the certificates are valid. It also argues that requiring certificate-holders to use the full value of a certificate in one visit is illegal, as state law says that consumers are entitled to the full face value of their gift certificates.

The LivingSocial.com class action lawsuit is brought on behalf of a proposed class of all Washington residents who weren’t able to obtain the full value of their LivingSocial gift certificates, and a proposed subclass of all U.S. residents who’s gift certificates expired before the five-year limit set by federal law.