Groupon is getting in trouble with state liquor laws. At least it is with Massachusetts’
Alcohol Beverage Control Board, citing violations of various liquor laws in the state, but mostly regarding discounted drinks. However, Groupon appears to be the only one of its kind under scrutiny, as competitors like KGB Deals continue to promote coupons applicable to food and drink specials.
In some others states, at least, Groupon appears to be somewhat in the clear. In New York, for instance, it appears to be [permissible] to discount drinks as much as 50% – but no more – while in California, anything is game as long as Groupon never uses the word ‘free’ around an offer where alcohol is involved, according to officials in those states I spoke with Friday. Of course there are 47 other states, approximately one-third of which are similarly strict as Massachusetts around the sale of alcohol. It’s a good bet Groupon will face more booze troubles.
One commenter at Forbes writes, since Groupon’s policy change in response to the purported violations, “How are we going to eat $50 worth of $2 tacos???” Naturally, this leads me to question a few things: If Groupon (and implicitly the bar or restaurant in question) is not allowed to offer coupon discounts, does this apply to discounted restaurant gift certificates from venues like Restaurant.com? Are coupons and gift certificates treated as one in the same legally, or does this differ from state to state? Does it matter if a third-party is offering the discount on a coupon or a gift certificate? I assume that, if you purchase a gift certificate from a restaurant (or even get the restaurant gift card from Costco or a grocery store), it is treated as cash at said restaurant, and is therefore applicable to both food and alcohol. I’d like to know if that’s not the case in some states.
I fail to see a distinction between Groupon’s and Restaurant.com’s wares: both are pre-paid deals. Whether I pay $10 for $25 worth of food and drink at an establishment with a Groupon or pay $10 (sometimes $2 or $3 if you have a promo code) for $25 worth of food or drink at an establishment with a Restaurant.com gift certificate would seem irrelevant. Then perhaps Restaurant.com’s “gift certificate” is a misnomer as it is a discount with restrictions like Groupon. And yet, it appears that you can continue to buy both food and drink with a regular restaurant gift card/certificate. If a restaurant compensates you for a bad experience with a gift certificate, is it in violation if you use the gift certificate for “free” drinks? Is it in violation if it compensates you 100% for said bad experience immediately and your order included alcohol? What about if you win a certain amount off your tab during a restaurant-hosted trivia contest and the like?
And finally, I’m disappointed with the Internet’s offering of state liquor laws compilations. There’s Wikipedia’s reference, but it seems incomplete on restrictions. I suppose I was expecting a ranking with up-to-date descriptions, because I’m not entirely clear what each state comprehensively allows or restricts in 2011. Perhaps a project to pursue later, unless y’all have a better reference.
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I have registered restaurant.com coupons before. It is the responsibility of the restaurant to establish alcohol restrictions in the coupon guidelines before posting them for sale. You’ll read “Excludes: Alcohol” in our coupon’s guidelines. When customers come in with restaurant.com coupons, we need to tally the food sales to make sure they exceed $50 before applying the discount. Alcohol cannot be the item that tips the scales and the Alcohol Law Enforcement division has strict penalties in place for transgressions of this nature.
Discretionary discounts on alcohol are illegal here in North Carolina (as well as many other states) and owners/managers are required to relay this information to potential customers to eliminate confusion; however, it’s not required by restaurant.com that such restrictions be included in the text of the coupon, nor should it be. A nationwide corporation shouldn’t be responsible for local liquor laws (Groupon is no different).
One could argue that not specifying this information (no alcohol) in the coupon shouldn’t be illegal if it’s not honored, but then the restaurant isn’t really being honest with the customers when selling the coupon and just using a “bait-and-switch” tactic.
It’s quite easy to rack up a $50 tab with alcohol, but sometimes really hard to reach without, especially if you have the kind of place that’s known for some cheap food, but the fine print on restaurant.com’s coupons is very specific and says quite a bit. It also has suggestions on how to rack up a bigger tab with coffee, appetizers, desserts, and add-ons. To that end, you’re really just forcing people to get appetizers and dessert they may not want. They ultimately suggest a cheaper coupon (i.e., $10 for $20) for owners/managers if you have cheaper food.
But at the end of the day, it’s not the government “cracking down” on Groupon (or restaurant.com), rather they are trying to make sure the laws are being followed. It’s not them deciding Groupon is breaking the law, but making sure coupons aren’t being used for alcohol (which is already illegal). Whether or not it should be illegal is a different story.
I suppose law enforcement agencies find it easier to nip it in the bud by going to the source of the coupons rather than sifting through millions of ever-updating coupons to see if any individual establishment is breaking the law. But at the end of the day, it seems unlikely they will be able to nail Groupon for anything substantial because it’s not their job to make sure that the supplier of the coupons is complying to local law. Much like in the example of a coupon for a discounted “massage,” they wouldn’t be able to come after Groupon.