Who knew a massage could be so stressful?
A Groupon for a discounted rub-down may cause a spa in Hallandale, Fla. to shut down.
Modern Wellness Spa has accused the daily deals giant of withholding payment and then threatening to sue when the small business said it could no longer afford to honor discounts promoted through Groupon’s site.
“We’ve serviced around 70 people free of charge,” said Michael Roitman, a manager at the spa who set up the deal after he was approached by a Groupon sales representative two months ago.
Modern Wellness is just the latest small business to hop on the anti-Groupon bandwagon. The daily deals service is not only facing the ire of Main Street. It's also suffering from a crumbling stock price amid dismal earnings and reports that its earliest backers are dumping their shares.
Groupon works with merchants to sell discounted goods through its platform. The website collects the funds as the deals are sold, takes a cut of the sales -- typically half -- and disperses the rest to the vendor in three separate installments. But when those payments are slow to arrive, businesses suffer from the surge in customers without a corresponding boost in revenue.
"Groupon still hasn’t paid us the $2,700 it owed us on August 9th. So we got fed up and told the rep we would not continue to honor the deal without payment,” Roitman told HuffPost. “His reply was to threaten us with a lawsuit.”
“We can’t go on much longer servicing these customers,” said Roitman, adding that the spa is seeing six to 10 Groupon-wielding customers walk through its doors each day. “But if we don’t serve the customers who come in with Groupons, they’ll go online to complain and we’ll get bad reviews.”
If that happens, it wouldn’t be the first time a small business saw its online reputation suffer because of a daily deal. An academic study conducted earlier this year found that, after offering a Groupon deal, businesses tend to see their Yelp rankings fall.
Nicholas Halliwell, a Groupon spokesman, denied that a company sales rep threatened Modern Wellness with a lawsuit. In an email to HuffPost, Halliwell said Groupon was withholding payment because too few vouchers had been redeemed by users and because a large number of users reported being unhappy with their experience and asked for refunds.
“It’s absolutely in line with Groupon’s policy to withhold payments due to high refund rates and low levels of customer satisfaction,” Halliwell said. “If a customer has a bad experience and seeks a refund, then that directly affects a merchant’s payment.” He added that Groupon has already paid the spa more than the value of the massage vouchers redeemed thus far (a claim that the spa disputed).
Listen to Nate Hindman discuss the Groupon fiasco on The Wall Street Journal's "Daily Wrap":
Rocky Agrawal, a stock analyst who has placed bets on Groupon’s demise and regularly publishes blogs that poke holes in the business model, said he reached a former Groupon sales rep about the late payment reports.
“Dealing with the finance department was a huge pain in the ass, they mailed the checks so damn slow, it was terrible,” the anonymous sales rep told Agrawal. “It was just a constant fight (it seemed) for a vendor to get a check on time.”
To date, Groupon has paid $3,750.96 to Modern Wellness Spa, both companies confirmed. But the $2,700 scheduled to hit the spa’s bank account earlier this month never came, despite several emails from Groupon staff reviewed by HuffPost that claimed the payment had been released and was on its way.
It was not until Monday, after a VentureBeat story publicized the dispute, that Groupon staff told Roitman the company was holding the payment because of the refunds.
"The big picture here is we didn't know what we were getting into when this deal was put together," said Roitman. "Groupon is just not transparent."
This article has been updated to include additional comments from Groupon.
Illustrator Steve Gadlin really wants to draw a cat for you. His Groupon deal, which has since expired, offered drawings of cats doing whatever you want for $3. That included everything from cats meowing to nerdy cats riding pirate ships. Gadlin has drawn over 6,700 cats -- and counting -- for his customers. You can still buy cat drawings from Gadlin on his I Want To Draw A Cat For You website for $9.95 Gadlin was featured on season 3 of ABC's "Shark Tank", where he released the song "I Want To Draw A Cat For You." This past May, Castlespring Enterprises -- product manufacturer for Disney, Hasbro and Toys R Us -- announced it would make a line of products based on Gadlin's brand.
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Having trouble thinking of a baby name but have $1,000 to spare? Groupon thinks they have you covered: "A rose by any other name would smell as sweet, but a baby that isn't named by Groupon smells like missed opportunity." For that $1,000, the site will name your baby "Clembough." Half-publicity gimmick, half serious deal, a Groupon representative insists in the deal's Q&A that "this is the most serious deal that Groupon has ever seriously run in its serious history." The deal is still available.
Jeffery Dahmer's crimes -- murder, cannibalism and necrophilia of 17 young men between 1988 and 1991 -- are the kind of horror reserved for serial killer infamy. For anyone curious to see the streets and watering holes of Milwaukee where Dahmer stalked and picked up his victims, Groupon offered a $25 tour for two. However, after families of Dahmer's victims called the deal insensitive, the deal was shut down, after 15 purchases.
Sometimes a deal on Groupon is too good to be true, as was the case for Southern Californian residents who bought round-trip "Luxury" tickets to Las Vegas. The deal was offered for $55, down from $149, and promised a "luxury bus" with free WiFi, premium movies, snacks and an unlimited drinks option. MSNBC reported that some luxury buses came up to five hours late, while some never came at all. A month later, Groupon severed ties with LUX over the fact that the company wasn't providing satisfactory service. Groupon canceled the deal and refunded the passengers' money.
Earlier this year, Groupon found itself in the crosshairs of an anti-pornography group's war on smut after offering a tour of Kink.com's headquarters in the historic San Francisco Armory Building. Kink is the world's largest producer of fetish pornography, producing films that frequently feature BDSM. The tour included a look at the building's historical features, as well as a look into Kink's film sets, prop rooms and production facilities. Some champion Kink as an advocate of alternative sexuality, while others see Kink as providing a degrading form of "torture porn." Groupon defended Kink and the deal, which is no longer available after selling over 1,000 coupons.