Group buying giant Groupon accused by rival Cudo of bait-and-switch tactics

A war of words has erupted in the group buying industry, with local player Cudo accusing Groupon’s new Australian website Star Deals of using bait-and-switch tactics by showing consumers an advertisement for a deal but failing to offer that deal on its site.

The accusation comes a day after Groupon launched its first deal in Australia under the StarDeals brand but it is the second time in a week that the site has been accused of using such tactics after a botched Valentine’s Day deal in the United Sates.

“This type of bait-and-switch advertising is way out of line and threatens to damage the market as a whole,” Cudo chief executive Billy Tucker said in a blog post.

StarDeals was contacted for comment this morning but SmartCompany was told a response is still being co-ordinated with the American office.

Groupon is displaying an advertisement for Australian users that features a bright picture of macaroons with the text “All you can eat” displayed at the top of the ad with a price of $8. The StarDeals brand is clearly displayed below.

When users click through the advertisement the deal is nowhere to be found and some advertisements indicate that the deal is available “in Melbourne” when StarDeals is not yet offering deals in Melbourne.

“Clicking on the ad for $8 all-you-can-eat macaroons takes you to a sign-up page, no such offer exists. Deceptive yes. Bait-and-switch I think so,” Tucker says.

This is the second time this week that Groupon has been accused of such tactics. TechCrunch reports that Groupon in the US offered a deal for a coupon to pay $US20 for $US40 worth of flowers from flower company FTD on Valentine’s Day.

But when users clicked through they found the prices on Groupon were higher than on the FTD site.

Groupon head of customer service Joe Harrow responded in a statement saying the company was confused by the initial presentation of the prices as well.

“Anyone that already used their Groupon to buy something from FTD that was on sale will automatically receive a refund to their card for the difference that they paid over the sale price,” he says.

Tucker says while he may have been prepared to defend Groupon before the bait-and-switch incident he is now “No longer sure”.

“Unless I am missing something this type of bait-and-switch advertising is way out of line and threatens to damage the market as a whole. One thing is for sure, Cudo will never resort to these desperate tactics,” he says

The incident comes after Groupon was pressured into removing some SuperBowl ads from play in the US after consumers sparked an outcry, saying the ads were insensitive.

The company posted a blog post shortly afterwards apologising for the ads but so far no response has been forthcoming in relation to the Australian ads.

A spokesperson for the Australian Competition and Consumer Commission said while it could not comment on this particular instance consumers who feel they were misled should feel free to contact the regulator.