How to shop smart and avoid scams on flash sale sites like Groupon, LivingSocial, Gilt

Items in high demand are sure to run out fast, so log-on early. Credit: Colourbox
Watch out for gimmicks when you’re shopping on flash sale websites.
Credit: Colourbox

Flash sale sites like Groupon and LivingSocial have become incredibly popular, with people using the discount sites for everything from haircuts to vacations.

But Craig Crosby, founder of Counterfeit Report, said customers are not always getting the best deals – or even the real deal – on these websites. Crosby told us what to watch out for when shopping through third-party discount sites.

1. Counterfeits: Crosby said the majority of the products sold on these websites are not direct from the manufacturer, so it’s important to be on guard for counterfeit products. Crosby pointed out that Groupon sold Paul Mitchell products that were not authorized for sale on the site. Paul Mitchell Director of Brand Protection Vikki Bresnahan told Crosby that the authenticity of Paul Mitchell products can only be guaranteed when they are purchased at Paul Mitchell salons. Crosby said, “These sites sell diverted products – they go through a distributor that sell them through the back door, so they could be adulterated, diluted or even counterfeited.”

Crosby said concerned customers can really only test the authenticity of the products by calling the manufacturer and asking if they sold products directly to the website in question, or by buying it and comparing it against the real deal. The Counterfeit Report does lab tests on perfumes purchased online, and Crosby said some have tested positive for urine and antifreeze.

2. Value does not mean price: Sites like Groupon, LivingSocial or Gilt will often advertise an original value of a product, but value does not always mean retail price. “’Value’ is a gray area,” said Crosby. “It allows them to completely exaggerate these claims and use them hypothetically. What is a value? It could even include the cost of driving somewhere to get the product and other crazy claims.” Crosby pointed to the Paul Mitchell example again, when Groupon advertised a shampoo as 51 percent off at $13.99. The problem? The shampoo retails for only $9.50 at Paul Mitchell salons.

Websites like Gilt have also been criticized for selling “discounted” products from phony brands like Alex & Alex – brands that are only available on Gilt. A representative for Gilt told the New York Post that the original retail prices are based on similar products.

3. Go directly to the retailer and ask for a discount: Retailers pay sites like Groupon a big cut to have their discounts advertised online – a cut they’re often happy to bypass. “You may get a better deal simply by calling and asking,” said Crosby. “The retailer would love to have you come in and not pay a premium to Groupon for the advertising.” Crosby cited one example during which Groupon sold a Go Kart race for $14 for 50 percent off the original price, but he called the same racetrack and found that they offered a daily discount rate of $15 per race anyway. Crosby said, “The value is only realized when the consumer does their homework. People misplace their confidence with these websites – they’re not truly the discounts they claim to be.”

Follow Andrea Park on Twitter: @andreapark



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