A few days before Labor Day, CityDeals.com, a popular deals website (based in Utah) shut its doors abruptly. Real answers are hard to find, but the word on the street is that CityDeals has been suffering from cash crunch, mismanagement, and a host of other problems which resulted in them not being able to pay some merchants their share of revenue from gift certificate sales. Understandably, merchants are upset as well as the consumers who bought the vouchers.
In the few days since the news broke, the knee-jerk reaction has been for merchants to stop accepting the certificates. This has left consumers very disgruntled. I think this is a fatal mistake for these businesses. Of course, they have a right to be upset and to sue CityDeals to get their money. However, refusing to accept previously purchased certificates leaves a bad taste in consumers' mouths. Consumers can't retaliate against CityDeals, so the only one to take it out on is the merchant itself. I bought a couple of certificates to Marley's, a gourmet slider joint in the Harley Davidson store in Lindon, Utah. I got them 6 months ago. I decided to call them today to see if they accept coupons anymore, and they gave me a quick and emphatic NO. Really? CityDeals really didn't pay you for certificates purchased 6 months ago? I have to believe they did, and if so, then this is outright thievery.
I understand the merchant wanting to resist giving away their merchandise. However, they are giving away future business and risking a whole lot of negative buzz, especially online since the CityDeals crowd is pretty social media savvy.
What merchants should do about CityDeals
Merchants should accept coupons and do what they can to recover revenue from CityDeals through legal actions or by negotiating with those that are trying to scoop up what remains of that company. The fact of the matter is that the customers bought the coupons, which were honored by the merchants at the time of purchase. The merchants were using CityDeals as a marketing venture to gain more exposure. They certainly got it since coupons were purchased. It would be a shame if they turned it into negative marketing by refusing the coupons.
By denying a certificate, they are:
- Saying that all they care about is the few bucks they can make or lose off of a stranger, instead of caring about the satisfaction of a hopefully repeating customer.
- Stealing from the customer, since they paid for their service or product in advance.
- Throwing a tantrum over their poor decision (in hindsight) of trusting a start-up to promote their business. There is fundamentally no difference between paying a PR firm to promote your business and paying CityDeals to promote your products or services through certificates.
The bottom line: consumers bought gift certificates. CityDeals was a merchant-authorized vendor of these certificates. The certificates were essentially sold on consignment by CityDeals. Just because the venue at which you bought the certificate no longer exists, it does not invalidate the certificate. If the merchant didn't get paid by the shady venue, then that is the merchant's problem. People still bought their valid certificates legally, so they should be honored.
What consumers should do (to be nice)
While consumers should be able to redeem their certificates, it might do some good if they didn't try to redeem all their certificates immediately, similar to a rush on a bank. If a merchant heavily pushed their CityDeals campaign, a rush of certificates could possibly push some out of business or cause them to lay employees off. If a consumer has faith in their merchant to continue to accept previously purchased coupons, then they could be nice and just use them as they were originally planning to (date nights for the next month) instead of rushing down to Baskin Robbins and buying $60 worth of ice cream in one shot.
It looks like there is a list being built at jabberman.com/citydeals-merchants that shows which merchants are currently accepting previously purchased CityDeals certificates and which ones aren't.
UPDATE: According to this article at ksl.com, CityDeals stopped paying merchants in July 2011, which means that any certificate purchased before then was paid up. So, if the merchant refuses to honor the certificate, then the merchant is flat out stealing from the consumer.