Rue La La Hit With Lawsuit Over Vouchers That Expire Too Soon

Daily deals site Rue La La is the target of a class-action lawsuit claiming that Rue La La is breaking federal and state laws with gift certificates that expire after months instead of years, the Boston Business Journal reported.

The suit, filed in federal court in Boston, says the named plaintiff, Leah Mirabella, paid $59 for private training sessions at a health club in Boston on July 5, 2012. But Mirabella says she was unable to redeem it before the voucher expired on Oct. 31. Federal law requires gift certificates to last for at least five years, and Massachusetts law sets a seven-year minimum.

The lawsuit was filed last week by a Washington, D.C., law firm that has previously gotten settlements from Groupon (NASDAQ:GRPN) and LivingSocial.

According to the complaint, Rue La La did change its policy sometime after July 2012. Under the new policy, Rue La La vouchers now have two expiration dates: one for the promotion that the voucher is specifically for (typically a few months), and the other for the actual amount paid by the customer (which is now the duration required by federal or state law).

The Groupon and LivingSocial cases have pretty well demolished the idea that calling daily-deal certificates "vouchers" protects such sites from rules for gift certificates. Money was paid, a value is attached—that sounds a lot like a gift certificate, even if it's only good for specific purchases.

The question for Rue La La is whether it can frame its vouchers as gift certificates that also have extra value if they're used for a specific purpose within a few months. That's tricky, and it's almost certainly not what lawmakers had in mind when they set the requirements for gift-certificate longevity.

And for retailers, the question is whether they'll be dragged into these lawsuits, the way Nordstrom (NYSE:JWN) was for a lawsuit over a Groupon deal in 2010. Daily deal websites have gotten better about staying inside the law in the years since then, but there are still apparently legal problems that could hit them if they're involved in one of these deals and aren't careful.

For more:

- See this Boston Business Journal story

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