Groupon to Connecticut AG: You Don't Understand

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If "Groupons" are gift certificates, there's a daily deals site in Chicago that may run into some trouble in Connecticut, where it's unlawful for gift certificates to have expiration dates. When consumers buy Groupon's deals, there's typically a months-long timeframe in which they have to use the offer - otherwise it's an empty purchase.

"It appears that what Groupon, Inc. sells or offers may fall within the definition of a gift certificate under Connecticut law," Connecticut Attorney General George Jepsen said in a written statement yesterday. "I have not prejudged Groupon or reached any conclusions. I am hopeful that any issues can be resolved through discussion and cooperation."

Groupon put out a response, saying the company would help "him and his team understand our business model as it relates to the many Connecticut merchants and consumers who use our service."

The development underscores a couple of items.

First, it's a little unclear to most people what exactly a "Groupon" is. Is it a for-me gift certificate, a coupon, or the term Groupon, LivingSocial and other daily deals players prefer, a "voucher"?

Second, the Connecticut Attorney General's office isn't afraid to challenge business practices of web-based companies.

Last month, Jepsen and his team sought explanations related to consumer privacy in concerns to Facebook's "Tag Suggestions" feature. It involves facial recognition software that identifies Facebook users in photographs and stores the information in the Palo Alto, CA-based firm's database.

In May 2010, Richard Blumenthal, the state's attorney general at the time, demanded evidence from popular classifieds site Craiglist.org that it was combating the posting of advertisements for prostitution and other illegal activities. San Francisco-based Craigslist shuttered its "adult services" section three months later.