LivingSocial Inc. has agreed to pay $4.5 million to settle a class-action suit over the expiration dates of its daily deals, half a year after rival Groupon Inc. reached a larger settlement in a similar lawsuit.
The proposed settlement ends a protracted legal battle between LivingSocial and a consolidated group of plaintiffs from across the country. That group includes Melissa Forshey, who sued LivingSocial in April 2011 claiming she was unable to redeem an expired voucher for Jack’s Boathouse in Georgetown. Her complaint was later rolled up with five others and heard en masse in D.C.
Under the agreement, which was expected, District-based LivingSocial will establish a settlement fund to pay out claims, as well as “revise several portions of its business practices,” according to the court documents filed Oct. 19 in U.S. District Court for the District of Columbia. Some of those proposed changes were put in place by LivingSocial well before the settlement.
Understanding the settlement requires a bit of background on LivingSocial’s fine print.
The company’s daily deals often carry two expiration dates – one for the “paid value” and another for the “promotional value.” The former represents what the consumer spent on the deal, while the latter represents the discount. The promotional value expires much sooner. For example, if a LivingSocial user spent $25 for $50 worth of food at an Italian restaurant, and let the deal go unredeemed past the deadline, he still might be able to get $25 worth of linguine, just not the discount.
The question of whether LivingSocial deals can carry any short-term expiration at all was at the center of the lawsuit. Plaintiffs argued that the federal Credit Card Accountability and Responsibility Disclosure (CARD) Act and some state laws prohibit the vouchers from going bad for at least five years. The social commerce giant disagreed – and still does – that its deals fall under regulations governing gift certificates.
The settlement entitles LivingSocial users who submit claims to a portion of that $4.5 million, up to 100 percent of the paid value “of any LivingSocial deals that is unredeemed and unrefunded and whose promotional value has expired,” according to court documents. In other words, if your LivingSocial coupon lapsed, you might be able to get all or at least some of your money back. But don’t expect anything more.
LivingSocial’s terms and conditions will be changed “so that the expiration dates on its vouchers and website are more clear and understandable to consumers.” That includes —when applicable — more explicitly spelling out a deal’s paid and promotional value and their respective expiration dates, offering a refund for an unredeemed LivingSocial voucher within seven days of purchase, and setting the expiration date of the paid value of a deal to at least five years. LivingSocial already had those last two provisions in place before the settlement.
Forshey was represented by Bethesda-based Cuneo, Gilbert & LaDuca, LLP.
Original Source – BizJournals.com
