Suit accuses Groupon of fraud

The owner of a Chicago boat rental company sued Groupon this week claiming the internet deals giant pocketed hundreds of thousands of dollars in funds that it falsely said were being refunded to clients — allegations that Groupon wholly dismisses.

The alleged scheme was uncovered by Joe Brown, owner of Chicago Boat Rentals, after a customer who’d purchased a Groupon voucher called the Goose Island-based charter operation to set up the rental but was told the money he paid for the Groupon had already been refunded to him, according to Brown’s attorney Stuart Chanen.

Another Groupon customer hosted family members in town from India on a pontoon boat cruise of the Chicago River, yet Groupon later said the voucher went unused and the man had been issued a refund.

“Groupon in essence makes a fraudulent “bet” that a voucher will remain unused,” the suit states.

Other customers were completely fabricated, the lawsuit alleges.

Chanen pointed to one woman who showed up on Groupon’s records for having purchased a boat cruise voucher. When Chanen reached out to her and asked about the purchase, she was confused. The woman said she never purchased the online deal. To hammer home the point, she said her maiden name appeared on the deal, but she hadn’t used her maiden name in years and no longer had credit cards in that name.

Groupon spokesman Nicholas Halliwell, in an email sent Thursday, said the lawsuit was baseless.

“As we’ve repeatedly told Mr. Brown, the allegations in this lawsuit are completely without merit and based on a fundamental misunderstanding of how Groupon’s processes work. Not only has Mr. Brown been fully paid for his Groupon promotions, he’s actually been compensated well beyond the services he’s provided. We take unfounded allegations of fraud extremely seriously –– especially as an advocate for local merchants that’s generated more than $19 billion for small businesses over the last 10 years –– and will aggressively defend our business and reputation.”

Brown, who claims the scheme cost him about $350,000 over the course of five years, is seeking $1 million in damages. Apart from recouping losses, Brown’s hope was that other Groupon clients would also check their financial records, Chanen said.

Details included in the lawsuit, which was filed Monday, were presented in person this week to attorneys at Illinois Attorney General Lisa Madigan’s office, as is required when a suit includes a claim under the Illinois Consumer Fraud Act.

“They said ‘We’ll look into it,” Chanen said.

A representative of Madigan’s office was not immediately available for comment.

On a sidetone, Chicago-based Groupon recently saw its shares rise after reports that it was seeking a buyer.