GROUP discount buying is a phenomenon which is sweeping the world, including South Africa.
Also referred to as “collective obtaining”, the companies operating these schemes online offer services and products at heavily discounted “deal of the day” prices, on condition that a minimum number of persons want in on the same deal.
There are 20 or so companies operating in this space, in South Africa, including several run by media houses, and in the name of research, I’ve registered with a few of them.
In the past week, for example, I’ve been offered, via e-mail, 50 percent off a facial peel at a beauty spa, a half-price chilli con carne at a Mexican restaurant, a 40 percent discount on foil highlights at a hair salon, 56 percent off on a Groovy Ball ride, and colon hydrotherapy at an “exclusive wellness spa” at less than half the normal price, among many other things.
If I were keen on any of them, I’d submit my details and credit card number, and, if enough other people were keen on the same deal, it would be confirmed, and I’d be sent a voucher – if not, the deal would be off, and my credit card would be spared.
But a number of savvy consumers have written to me to point out that these vouchers are generally only valid for a short period – usually just three months – and as such they are in contravention of the Consumer Protection Act, which stipulates that all pre-paid devices – cards, coupons, vouchers etc – must be valid for at least three years.
Technically, if I got that voucher for a half-price chilli con carne, I should be able to present it at the restaurant three years from now and get the meal at that price – R32.50.
Clearly, that plays havoc with the group buying business model.
I approached the largest group buying company, both globally and in South Africa – Groupon – for its comments on the CPA compliancy issue.
Joint CEO Daniel Guasco said as the company understood the act, its products and services were “promotional offers” in terms of the act and as such were not required to be valid for three years.
“Any promotional deal which is offered for purchase via the Groupon website is limited to the period agreed with the merchant offering the promotion, and the Groupon coupon issued to consumers reflects that validity period,” he said.
However, Guasco said: “Section 63 of the Consumer Protection Act requires that any consideration paid by consumers in advance belongs to the consumer until either the Groupon coupon is redeemed, or until three years have expired… so if a voucher has not been redeemed, we will transfer credit equal to the consideration paid for the voucher to that customer’s account.
“The credit will be valid for three years, calculated from the date that they purchased the Groupon (coupon) from us.”
In other words, if I didn’t redeem that chilli con carne voucher within its validity period, I wouldn’t lose out – I could use its value towards any other of the many offers which come my way in the next three years.
Another of the larger group discount buying players in South Africa, YouDeal, has a similar policy.
According to its recently revised terms and conditions: “When the vouchers expire, they will no longer be honoured by the supplier.
“Voucher holders are required to inform YouDeal in writing that their coupon has expired, and request the company to credit their account with the original value of the coupon.
“That value is then valid for three years from the date the coupon was bought.”
YouDeal is also implementing a new feature on its site which will send the purchaser an automated courtesy reminder 72 hours before the voucher expires, said YouDeal’s David Whitehead.
“This will hopefully prevent any disappointment.”
On receiving a press release about the launch of Gemgem, “a collective buying site focusing on true bargains for much-sought-after mommy goods”, I asked the same question about voucher validity.
CEO Jade Bush responded: “The relationship is between the users of our site and the merchants and this issue is under consideration, but the value of the voucher will be honoured by the merchant.”
Presumably she meant for the full three-year period, as stipulated by the CPA.
It could be argued that the actual voucher – for a specific meal and a specific restaurant, for example – should be redeemable for up to three years. But to my mind, should a consumer not redeem the original voucher in the specified validity period, allowing them to transfer the amount they paid for that particular voucher to any one of the hundreds or thousands of offers made in the course of three years, is a fair deal.
Naturally, I sought the view of National Consumer Commissioner Mamodupi Mohlala on this, several weeks ago, but despite several e-mail reminders, I have yet to get a response. She’s clearly a very, very busy woman.
What can I do, but keep trying. The buck stops with her.
In the meantime, before you take up one of these offers, and supply your credit card details, check the terms and conditions very carefully, especially with regard to the validity of the vouchers.
In this CPA age, you should most definitely not be made to forfeit your money entirely if you fail to use the voucher within the stipulated three months, for example.