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U-T offers settlement related to complaints about gift certificate business

Class action suit argues illegal expiration dates, deceptive practices from "Daily Deal" provider SignOn San Diego

The U-T San Diego yesterday sent a notification to individuals who had subscribed to its “Daily Deal” vouchers announcing a proposed class action settlement in response to an August 2011 complaint filed by Linda Low in federal district court.

Low alleges that the U-T’s SignOn San Diego website sold the deal vouchers, essentially discounted gift certificates, while listing unreasonably short periods for their redemption. Low further argues that such expiration dates are illegal in their entirety since the Electronic Funds Transfer Act, which governs the online payments collected by SignOn, prohibits the issuance of a gift certificate with an expiration period of less than five years.

The suit further complains that, in addition to the unacceptable length of time allowed to redeem the certificates at their promotional value (frequently twice the actual amount consumers pay for them), some vendors have refused to honor the certificates even for the amount actually paid, or have gone out of business before they can be redeemed.

Vendors’ motivation to fail to honor the “cash value” of the certificates may be related to the fact that SignOn keeps roughly half of the proceeds of any gift certificate sales.

Without admitting guilt, SignOn is proposing to allow any customers who have a record of which deals they’ve purchased but were unable to redeem, and are willing to attest that they attempted to redeem the vouchers for the original purchase price but were denied that opportunity by the merchant, to return them for “Deal Bucks,” which would only be useful for consumers wishing to purchase more deals through the U-T site. The company is offering a 120% “Deal Bucks” credit (based on the purchase price and not the gift certificate value) for each voucher that meets these parameters unless a consumer purchased more than one of the same kind, in which case the consumer would receive 120% credit on one gift certificate and a flat credit equal to the purchase price of each additional certificate.

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The “trial by media” notoriety kept growing with the Boomtown Rats’ song “I Don’t Like Mondays.”

The U-T San Diego yesterday sent a notification to individuals who had subscribed to its “Daily Deal” vouchers announcing a proposed class action settlement in response to an August 2011 complaint filed by Linda Low in federal district court.

Low alleges that the U-T’s SignOn San Diego website sold the deal vouchers, essentially discounted gift certificates, while listing unreasonably short periods for their redemption. Low further argues that such expiration dates are illegal in their entirety since the Electronic Funds Transfer Act, which governs the online payments collected by SignOn, prohibits the issuance of a gift certificate with an expiration period of less than five years.

The suit further complains that, in addition to the unacceptable length of time allowed to redeem the certificates at their promotional value (frequently twice the actual amount consumers pay for them), some vendors have refused to honor the certificates even for the amount actually paid, or have gone out of business before they can be redeemed.

Vendors’ motivation to fail to honor the “cash value” of the certificates may be related to the fact that SignOn keeps roughly half of the proceeds of any gift certificate sales.

Without admitting guilt, SignOn is proposing to allow any customers who have a record of which deals they’ve purchased but were unable to redeem, and are willing to attest that they attempted to redeem the vouchers for the original purchase price but were denied that opportunity by the merchant, to return them for “Deal Bucks,” which would only be useful for consumers wishing to purchase more deals through the U-T site. The company is offering a 120% “Deal Bucks” credit (based on the purchase price and not the gift certificate value) for each voucher that meets these parameters unless a consumer purchased more than one of the same kind, in which case the consumer would receive 120% credit on one gift certificate and a flat credit equal to the purchase price of each additional certificate.

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Caveat emptor.

Jan. 9, 2013

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