Lawsuit Filed Against Groupon

Lawsuit Filed Against Groupon


Valorem Law Group 312-676-5480
June 27, 2018 847-644-3003

On June 26, 2018, Corporate Tailgate Services Inc., dba Chicago Boat Rentals (“CBR”), 1177 North Elston Avenue, Chicago, filed a lawsuit against Chicago-based company GROUPON, Inc. (“Groupon”), alleging that Groupon had defrauded CBR. The Complaint alleges that Groupon used a fraudulent refund scheme in which it issued itself hundreds of thousands of dollars worth of “refund credits” for purported refunds that were in fact never refunded to customers. The Complaint alleges that “Groupon presented the fabricated and false ‘refunds’ as legitimate refunds actually given to purchasers, but in fact many of the refunds were fabricated by Groupon and not given to purchasers. The fabricated refunds that Groupon identified to CBR simply resulted in money that rightly belonged to CBR being kept by Groupon itself.”

The Complaint outlines the approximately 5-year relationship that CBR had with Groupon, in which Groupon sold discounted Groupon Vouchers to CBR’s boat rental services. 20% of the money Groupon collected from customers went to Groupon as a “service fee” under the parties’ agreement, and 80% was supposed to have gone to CBR for providing boat rentals at discounted prices to Groupon customers. The Complaint notes that for many sales, the sales proceeds were correctly divided 20%-80%. For many other sales, however, the Complaint alleges, Groupon fabricated that it had given refunds to customers and then deducted the amounts of those purported refunds from money that it rightly owed to CBR. The Complaint outlines one example where the customer purchased the Groupon Voucher in April, redeemed the voucher to rent one of CBR’s boats in July, only to have Groupon later assert that this customer had been refunded in April, on the same day as his purchase, and withholding CBR’s share of the customer’s purchase price from CBR. The Complaint alleges that the customer never received any refund.

Describing the scheme as both “complex and difficult to uncover,” the Complaint also alleges that Groupon took specific steps to cover up the scheme when CBR brought it to Groupon’s attention in August 2017, and then again in October 2017, including Groupon removing certain questionable names and redemption numbers from Groupon’s “Dashboard,” an online location where Groupon merchants may check the then-current status of specific Groupon vouchers, customers, and/or redemption numbers.

CBR’s Complaint seeks approximately $350,000 and $700,000 in punitive damages against Groupon, as well as attorneys’ fees, costs, pre-judgment interest, and post-judgment interest.
CBR’s outside legal counsel, Stuart Chanen, of Valorem Law Group, will hold a press conference to answer questions on the lawsuit on Thursday morning, at 9:30 a.m., at 218 N. Jefferson Street, Chicago, IL, Suite 300.