Groupon's hidden refund policy

Groupon Australia joined seven other group buying giants signing up to an Australian Direct Marketing Association-led Code of Conduct last week. But a review by Technology Spectator of Groupon's website has found it is already failing to comply with the code.

ADMA, and its code development partner the Australian Interactive Media Industry Association say one of the Code's objectives is to ensure that consumers have access to product and service information they need to make informed choices. It's all about ensuring transparency in an effort to boost consumer confidence in dealing with group buying sites.

A recent Fairfax report revealed Consumer Affairs Victoria has received more than 160 complaints from consumers about group buying sites this year, compared to just 22 similar complaints in 2010. And that's just from one state of Australia. It's clear the industry has some work to do to protect its future.

Refunds are one sticky area where more work needs to be done, with the Groupon refund policy far from easy to find. The Code of Conduct states that a group buying site must have a clear and unambiguous refund policy that is prominently displayed on its website. But Groupon's refund policy can only be found after scrolling through its rather lengthy statement of terms and conditions, buried in the fine print at the bottom of its home page.

Contrast this with the approach taken by Scoopon, which also includes its refunds policy in a lengthy T&C document, but links directly to it from a prominent section on its home page that uses a logo to promote the new Code of Conduct along with what it alls the “Scoopon Guarantee”. It at least shows the organisation has thought about how to make it easier for consumers to find the relevant piece of information.

Small fry and privacy 

There's little doubt Groupon was likely distracted last week in the lead-up to its US float.

In an initial public offering, which analysts say was largely designed to cater to the interests of existing shareholders, Groupon raised $US700 million on Friday, valuing the company at around $US13 billion.

Australia's group buying sector is worth far less than this sky-high valuation, with the entire market predicted by Telsyte to be worth around $158 million.

So Groupon Australia, which according to Telsyte ranked 5^th of the eight leading sites in the local market, is still largely small fry for its massive parent.

This is worth considering when you look at another clause contained within Groupon's terms and conditions document. It states:

“If there is a sale, merger, consolidation, change in control, transfer of substantial assets, reorganisation or liquidation or Groupon Australia Pty Ltd then, in our sole discretion, we may transfer, sell or assign information collected on and through this website (including, without limitation, PII and other information), to one or more relevant third parties.”

That's not something that fits well with Australia's Privacy Act, which is mirrored by the Group Buying Code that states group buying sites should only transfer information overseas if it is going to a country with a similar privacy protection regime to Australia's, or if it has a contract in place with an overseas party that will treat the information as confidential. In the event of a Groupon Australia sale that could prove challenging.

Under the new Code, which it should be pointed out, is voluntary, consumers will be able to complain to ADMA, a national body which has agreed to publish the number of complaints received each year, as well as the number of breaches of the Code and an analysis of enforcement action taken.

All eyes will be on the main offenders, but since the Code is voluntary, and the penalties relatively light, in the end consumer use of group buying sites will deliver the final verdict. Groupon still has some way to go to justify that $US13 billion valuation.