Of all local deal websites, Groupon remains the most popular, but is it always safe to buy Groupon deals, and will you always save money by doing so?
There’s no doubt that many people have saved an impressive amount of money by using Groupon. You can save 50% or more on really fun activities in your local area, like basketball games, theater tickets, 5K race entries, restaurant discounts and more.
However, there are also some real dangers involved in using Groupon if you aren’t experienced with service, and aren’t aware of the red flags that might signal problems.
How to Spot Potential Fraud
In early 2015, I used Groupon to purchase an entry to an upcoming 5k race for my wife. The deal looked just as legit as any other on Groupon, or at least I thought so when I clicked the button to purchase it.
There were a few red flags that I should have noticed before purchasing, but being fairly new to Groupon, I didn’t know many better.
About a week later, we started wondering how my wife would get her run packet prior to the race (t-shirt, run number, color powder, etc…). To find out, I visited the website. The first thing I noticed was that the site looked like it had been slapped together by a first grader in elementary school.
Like I said, there were several red flags. The first was that the website mentioned the event was already mostly sold out. Did that mean if we didn’t get our packet before the race that there wouldn’t be any slots left even if we had purchased a Groupon?
The next thing I noticed was that the date of the event on the website was listed as May 31st, while the date of the event listed on Groupon was May 30th. That was a bit disturbing. What would happen when all of those Groupon runners showed up on the wrong day? Looking for answers, I clicked on the “Contact” link in the menu.
There was a toll-free number available. Great! I called it, and heard a digital voice informing me that the number was no longer in service. Not good.
So I filled in the form with my question and submitted it. After three days, still not hearing back from what was slowly appearing to be a fraudulent race promoter, I contacted Groupon. In less than I day, I received a reply.
After informing Groupon that I had tried to contact the business, only to learn the phone number was no in service, and the form submission went unanswered. Thankfully, in just a few more days, Groupon was very quick to respond and issue an immediate refund.
The refund was appreciated, but the experience was still disturbing. Up to this point, I’d never come across a fake listing on Groupon, or anything else even remotely questionable.
Reviewing the experience, there were a few important “red flags” that could help anyone to identify similar scams in the future:
- Number of buyers. If there are only 1 or 2 buyers on a type of Groupon that is normally quite popular (like 5k races), that’s a bad sign.
- Amateur website. Always, and I mean always, visit the website of the business before buying a Groupon. Make sure it’s a legit website. And if the site looks like it was thrown together in 5 minutes, don’t take the risk.
- Little contact info. If there’s no easy way to contact the business beyond a simple web form, you could be taking a chance buying that Groupon.
- The fine print. Every Groupon has a “fine print” section. Read it carefully. Even if the business is legit, sometimes this section can reveal things about the deal that the title or description left out. Read carefully before buying!
The good news is that fraudulent listings on Groupon are very rare, and when the site learns about them, they are quick to shut them down. However, it does reveal a lot about Groupon’s dire quest to sign up more businesses that these few are getting through the sign-up process somehow.
When a Deal is Not a Deal
Beyond the few fraudulent listings, a much more prevalent problem on Groupon are deals from businesses that are structured in a way so that the deal isn’t really as good as the title makes it out to be.
Restaurants Like to Split Groupons
One of these techniques businesses use is splitting a deal into several actual Groupons.
The way this protects the business is that it limits your ability to actually get the full 40% discount advertised in the Groupon by only allowing you to spend $10 of the $30 Groupon at a time, on any given day.
This means if you take your family to the restaurant and spend $40, you can only use a $10 Groupon. Essentially this means you’re really only getting the 40% discount off 25% of your purchase. To make matters worse, you have to go back and make two more purchases to use your remaining Groupons!
The only way to make the best of a deal like this is to only purchase $10 worth of food at any given time.
The Hotel Room Bait-and-Switch
Another trick that businesses use is something I call the hotel bait-and-switch.
This is where a hotel advertises very steep discounts off their rooms on the main Groupon ad, but when you finally click and review the deal details, you’ll discover that the discount really only applies if you’re traveling alone or at least without kids, and only need one bed.
You’ll still be able to book a room with extra beds, but that cost will dramatically increase when you do.
And guess what, the Groupon deal often only applies to the days of the week when most people aren’t traveling – non-weekends. Sure, you can schedule the room for the weekend and book it through Groupon, but say goodbye to those cheap prices that were advertised on the main Groupon listing!
Home Services are Limited
One area of Groupon where you really need to carefully read the fine print is in the Home Services section. Here is where you’ll find local carpenters, pest control companies and home cleaning services trying to bring in new customers by providng discounts.
Unfortunately, these are some of the most tightly controlled discounts with many, many little details buried in the fine print.
You can’t really blame these companies. The last thing they want to do is give away their services for free, but this also means Groupon isn’t really the place for this kind of thing. Why offer 53% off window cleaning service, and then list a whole litany of stipulations that make the deal pretty much useless?
So be careful here if you do purchase a Groupon for a home service. Just read the “fine print” details with a very fine-tooth comb.
Skip the Products
The final area of Groupon that you want to be wary of are the products (the marketplace). These are things like electronics, toys, home & garden and more – the sorts of things that you might search for on Amazon or Google Shopping.
The deals at Groupon are anything but. It doesn’t take long to make a few comparisons between Groupon and Amazon to see that the best bargains to be found are anywhere but Groupon for products.
For example, on Groupon you might find a Apple EarPods with Remote and Mic for $12.99.
You can get the same thing on Amazon for $8.89, with free shipping.
On Groupon, you can get an 8-pack of LED solar garden lights for $29.99.
Sounds like a great deal considering they retail for $118.26, right? Not if you check out Amazon, where you can get the same set of lights for $25.99 with free shipping.
This doesn’t mean you can’t find any deals at all on Groupon. At the time of my review, I found a Night Owl Multi-Channel DVR Security System bundle for $199.99. Great deal.
I also found a Vaas HD Car Dash Camera for $24.99 on Groupon. Another great deal. So, while you can certainly get some decent deals on products on Groupon, you have to be very careful and make sure you check out other online retailers before purchasing that Groupon.
Use Groupon With Care
The bottom line here is that Groupon really is one of the best resources to get amazing deals. The catch is that not every “deal” is amazing.
As outlined here, there is always the possibility that the business isn’t being completely forthright, so do your due diligence before buying! There’s also the possibility that you could get a better deal elsewhere, so shop around. But if you do spot a killer deal on Groupon and the business looks legit, by all means, jump on it!
Do you Groupon? Have you ever had any problems or bad experiences? Share your own stories and thoughts in the comments section below.
Image Credits: looking skeptic via Shutterstock