Groupon Settles – What This Means for Advertising Fraudulent Companies
Groupon lawsuits are currently the most common type of lawsuit currently being pursued by lawyers. The original version of this business opportunity allowed members to sell discounted access to a marketplace. The program was popular for a while, but it soon began to be abused. As the FTC regulators began to look into the operations of the program, they discovered that more than one million consumers had participated in the scheme. When these consumers were not refunded or reimbursed after their transactions, they filed lawsuits against the company.
Table of Contents
Groupon Lawsuits
The original complaint that led to the current legislation was that the victims of the scheme were entitled to refunds because the gift cards did not fall within the definition of a gift card, and therefore they did not qualify for a refund. However, when the FTC stepped in and issued a cease and desist order, it turned the tables on the franchisor and changed the definition of these items. These new rules now require all manufacturers of these items to include the word “gift” on the packaging of the credit cards.
This new rules have opened up another line of attack by attorneys who are representing the victims of the Groupon and other similar fraud schemes.
They are now claiming that these new rules violates the commerce clause of the constitution. This argument is based on the idea that Congress intended for Congress to control interstate commerce, and therefore any regulation which goes beyond what the constitution allows is considered to be an illegal law. There is no doubt that the new FTC regulations go beyond what the constitution protects, but this argument is flawed on several different levels.
First, if the Court insists upon a settlement, there will be millions of dollars of additional losses.
While Groupon lawsuits are certainly a problem, there are still thousands of individuals out there who will choose not to pursue them due to the risk involved. Furthermore, as many of the original Class Action lawsuit winners have demonstrated, the original Class Action lawsuit winners were not required to pay their claims in full. In fact, often they were able to receive a substantial amount of money even after the expiration dates for filing. While the Class Action lawsuit loophole has certainly opened the floodgates to huge financial losses, it also has given birth to a new generation of legal issues which are likely to affect the economy in a negative way for years to come.
Second, there is simply no doubt that the government’s response to this crisis has been inadequate.
While there have been instances of legitimate settlement companies being shut down due to fraudulent activities, the truth is that the government is still trying to process too many claims at once and is doing so in an inefficient manner. While the FTC has attempted to solve the Groupon and other scams via warnings and regulations, it has simply not been able to prevent people from engaging in fraudulent activities through the use of the internet.
Finally, the fact remains that while the FTC may have a legitimate interest in pursuing claims against fraudulent business practices, they have also created an enormous potential for future abuse by victims of these scams.
The threat of lawsuits like the one filed against the Groupon owners allows consumers to feel somewhat safer about entering into agreements with online businesses. If the company has been sued previously for fraud, there will be an obvious warning that the company is trustworthy and will be willing to negotiate properly. Additionally, there will be an expiration date associated with any claims, ensuring that no more funds can be used by the company to settle the claims.
If an individual who receives a fake settlement email does nothing, the company will simply go on record as having settled the case and cannot legally charge consumers for it. By protecting consumers from becoming victims of these scams, the FTC has done more than merely protect advertising opportunities; they have created another potential fraud victim proofing mechanism.
