The Dark Side of Group Buying Sites

Some people wake up with a cup of coffee. Some need a shower before they can function. Me? I check my Groupon, Living Social, Tippr, and BuyWithMe emails. It's a gross obsession really. I do really love a good deal, but sometimes, just the notion that I can get something more than 50% off is just enough of a catalyst to get me to reach for my credit card.

What the hell? I write a financial literacy blog and I am a compulsive group-buying site deal shopper? Can the two go hand in hand? Here's how I learned to enjoy the opportunity that group buying sites provide and still have my dignity (and spare change) in tact.

1) Be smart about your purchases - I know that part of the reason these sites exist is so new businesses can draw clients in the door with a cheap meal or service with the hopes they become repeat customers. While I love trying new places, I also have to be somewhat realistic. Sure, an unlimited month of yoga for $40 sounds amazing, but the studio is 35 minutes away from my house. I may make it once or twice a week, which drops the value of the package significantly.

2) Read the fine print BEFORE you buy - many times, there are all kinds of restrictions on your half-off deal - not for use on alcohol, must be used in one visit, cannot combine with other offers like happy hour, etc. Check out the business' website to see if it's realistic for you to spend your certificate in one purchase, or if there's anything you'd actually want to eat there that's not on the happy hour menu.


3) Question refund policy - I have had two experiences (one with Groupon and one with LivingSocial) where the merchant went out of business before I was able to spend my certificate. With the LivingSocial deal, I didn't even know it was too late until I drove past the dark restaurant with the windows boarded up. I contacted both LivingSocial and the restaurant to ask if I could get a refund for my $20 and never received a response from either. On the flip side, Groupon actually contacted me when the vendor I purchased from was going out of business. They wanted to either give me a $10 credit towards another Groupon or to refund the $10 to my credit card. Customer service winner goes to...GROUPON. In this economy, particularly with new businesses, it's tough to keep the doors open, so make sure you're aware of how things are handled if the vendor can't honor your certificate.


In short, I look at group buying site deals like grocery store coupons: if it's not something I would normally buy without the deal, it's probably going to be a waste of money and I shouldn't get it. We've all had that moment where you MUST get something because it's on sale, right? Hopefully, it was a great purchase and you got a lot of use out of it. But sometimes, that thing you had to have just sits in your closet with the price tags still on. The deals online are definitely tempting, and I say go for it if it's in your budget and it's something you'll enjoy. Just don't get blinded by the good deal that isn't actually worth it.

One more group buying site to check out: Ideal Network. They are not everywhere yet, but it's a daily deal site where part of the proceeds benefit area charities. Check out their deal in Seattle right now - $10 for $20 of Theo Chocolate...and $2.50 of your $10 goes to one of 6 charities you choose (I chose the Woodland Park Zoo). Do you like how I preach about the evils of group buying sites and then show you a new one? Ha!

Theo Chocolate - feel free to get me some for Valentine's Day!

Any other thoughts on the merits or drawbacks of group buying sites? Do you have a particular strategy to get a bang for your buck but keep in line with your budget?