An online coupon seller is in trouble in New Jersey not for what it said, but for what it didn’t say. And it may be liable for big damages as a result.
Restaurant.com offers coupons for restaurants, which consumers can use to snag discounts. For example, a user can purchase the coupon for $10 and redeem it for a $20 meal. The coupons expire at the end of a year -- exactly one year less than the two year period New Jersey law requires for gift certificates.
New Jersey has a “Truth-in-Consumer Contract” law. It prohibits sellers from entering into contracts which include provisions that violate a consumer's established legal right. And a seller can’t get off the hook by using some general language like “void where prohibited.” Sellers have to be more specific, and tell consumers if a particular provision is void in the Garden State.
Suffice it to say, restaurant.com didn’t make the necessary disclosure. So, it argued the “Truth in-Consumer-Contract” law didn’t affect its service. It tried two arguments. First, it said since it didn’t offer “tangible property” the law didn’t apply. The court was unimpressed. It found that the statute indeed covered intangible property, and the restaurant.com coupons were essentially gift certificates, which have been classified as intangible property in New Jersey.
The court also rejected restaurant.com’s second argument – the statute applied only to written contracts. The court held that the Uniform Electronic Transactions Act – which says a contract cannot be denied legal effect solely because it’s in electronic form – blew this argument up.
If your business is participating in online coupon deals, let this case be a warning. You probably want to see if the deal terms comply with the applicable law. And make sure all disclosures are clear.