Prohibitions on short voucher expirations: Many states also set specific minimum limits on how long a giftcard is good for. That’s the category that prepaid discount vouchers probably fall into, because voucher buyers have already paid Groupon as much as they’re going to pay. But Groupon routinely stamps a much shorter expiration date on its vouchers. That has led to a dozen class-action lawsuits filed in six states, most of which named retailers as co-defendants—including Nordstrom, for a Groupon “daily deal” involving Nordstrom Rack stores in November 2010.It’s up to Groupon to stop printing expiration dates that are lawsuit bait. But retailers may dodge at least part of the problem by treating the vouchers like giftcards at the POS, and assigning an appropriately distant expiration date that matches local giftcard laws.
Restrictions on disposition of “abandoned” property: “If a consumer fails to redeem a discount voucher, many states treat the amount of the non-redemption as unclaimed property subject to escheat to the state,” the Harvard researchers write. Translation: The money from unused Groupons goes to the state, not the retailer.That’s usually exactly the same as the way an unused giftcard is treated. Fortunately, because it’s unused, it never goes through the POS, and it’s a problem for accounting, not IT.
Consumers’ right to cash back: At least eight states—California, Colorado, Maine, Massachusetts, Montana, Rhode Island, Vermont and Washington—require that a consumer can get cash back when the remaining value of a prepayment falls below a certain level. In cases like that, treating vouchers as if they were giftcards is the way to go.
Correct sales-tax treatment: “When a consumer pays in part with a discount voucher, should sales tax be collected on the usual retail price of the consumer’s purchase, or on the amount the consumer actually paid? For example, if a consumer redeems a $20-for-$50 voucher on $50 of food, does the consumer pay sales tax on $20 or on $50?” the researchers ask. The answer in many states, it turns out, is $20—although many Groupon retailers apparently calculate the total bill plus sales tax, and then take the discount off that.It’s a category where the prepaid vouchers should probably be treated like coupons, not giftcards. But it varies state by state, which makes it essential for the sales-tax calculation to be automatic at the POS.
Redemption processes at risk of error and malfeasance: “Many merchants simply write down a voucher number or cross off a line on a preprinted list of valid vouchers. These approaches invite errors both accidental and malevolent,” the Harvard researchers write.That may be a problem at a single store or restaurant, but it’s impractical for chains, where there’s already a POS code for tracking giftcards by their ID numbers. Unfortunately, it’s not as simple as treating prepaid vouchers like giftcards. The vouchers have their own numbers, and dealing with them within existing POS system is likely to require some work.
A voucher service’s liability when merchants fall short: According to the Harvard researchers, voucher services typically use legal language like Groupon’s: “The Merchant, not Groupon, is the seller of the Voucher and the goods and services and is solely responsible for redeeming any Voucher you purchase.” The researchers go on to argue that this doesn’t actually let Groupon off the hook, but of course it’s a retailer whose reputation goes through the grinder if it doesn’t live up to the deal.Once again, most of the problems can be avoided if retailers treat the vouchers like giftcards—or, for that matter, like coupons. It’s not a POS issue, just a matter of keeping the customer satisfied.
Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code.
-Marc
