

Groupon is an unregulated check cashing company - wagermethis
http://blog.womply.com/2011/11/groupon-an-unregulated-check-cashing-company/

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mikeryan
If you're using Groupon deals as a quick way to get some cash in order to
float your business then you're doing it wrong. Considering the way Groupon's
payment terms this whole premise of "using a groupon deal" to make payroll
doesn't even make sense. I'm tempted to call bullshit on this whole article.

There's a lot of hate out there for Groupon, some of it deserved, but this one
is a bit of a stretch.

~~~
barrybe
Anyone that uses a check cashing business or accepts a bad loan is probably
doing it wrong too, but that doesn't stop millions of people from doing those
things. Regulating that kind of thing is a good idea. To be fair though, I
don't know enough about Groupon's terms to say whether the comparison is fair.

~~~
fennecfoxen
If you want to argue for consumer protection, that's one thing. But anyone who
goes into business really needs to know better, and if they don't, you really
can't protect them from themselves.

I mean, it would be another thing if Groupon was systematically defrauding
smaller merchants, but I've not seen allegations to that effect.

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nikcub
GroupOn pays merchants 90 days net.

The customers have long come and gone before GroupOn sends you a check.

The rest of this post is thus redundant.

~~~
tomkarlo
Not according to their S-1: "Our current merchant arrangements are structured
such that we collect cash up front when our customers purchase Groupons and
make payments to most of our merchants at a subsequent date. Under our
traditional merchant payment model, we pay our merchants in installments over
a period of generally sixty days for all Groupons purchased."

According to their current merchant terms it's a payment after 30, plus every
two weeks after that on any balance.

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skurry
Given Groupon's published payment terms, this article is a little odd:
<http://www.groupon.com/pages/merchant-terms-of-service-1> (see 4.3). It seems
they're paying merchants only after coupons have been redeemed. So in reality,
merchants get their cash later than for regular purchases. Of course these
default payment terms can be overridden in a custom agreement, but I wonder
how often this really happens?

~~~
mapgrep
^^^This is an accurate and very important rebuttal. Groupon has taken flack
precisely _because_ its cash flow depends on delayed payments to vendors. The
vendors emphatically do not get paid up front.

If they did, Groupon would actually not be in business right now. The amount
it owes vendors exceeds its cash, but by the time it has to pay it has sold
more Groupons. In other words, Groupon pays old liabilities with new ones
(this is, obviously, a point of intense controversy).

[http://www.businessinsider.com/groupon-low-on-
cash-2011-8?op...](http://www.businessinsider.com/groupon-low-on-
cash-2011-8?op=1)

"...it collects cash from Groupons the moment it sells them and doesn't have
to pay some of the cash to merchants until 60 days later..."

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chc
Under this bizarre classification scheme, I'm pretty sure anyone who sells
anything with a payment plan rather than requiring full payment up-front is
also an unauthorized check-cashing company.

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browser411
We've surveyed over 1600 Groupon merchants, and 75% say they would like to use
Groupon again. In general, it seems they are pretty satisfied.

We did a text analysis of over 150,000 words of open-ended responses:

* Fewer than 2% of all these merchants even mentioned "cash upfront" as a benefit of running a deal. Not a single one mentioned it as a primary benefit/drawback.

* A few merchants did in fact complain that Groupon sometimes held on to the cash a little TOO long before funding their accounts

* FYI, the top stated benefits were "New Customers" and "Advertising Effect".

Groupon is in no way perfect, but its characterization as a check casher is
pretty silly. I'm sure if you hunt hard enough, you can find an unhappy
Groupon merchant and put words in their mouth.

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ednc
I'm calling BS (or at least poor research) on the story. I personally know 4
businesses that did groupon deals, and none of them got the money up-front. In
fact one of them had the opposite problem, and it took several months to get
the check (The account rep had apparently screwed up some paperwork, got
fired, and it took a while to get straightened out).

Also, how would groupon even know what the check amount should be up front? I
guess they have some history on how many deals they sell by type / geo at this
point and could estimate, but it seems risky (on both sides).

Maybe groupon does advances for larger businesses or national brands, but I
don't think they are the ones who would need to raise quick case.

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eykanal
Some merchants may use Groupon this way. Others use it the same way that they
do any other advertising service; as a technique for getting their foot in the
door, so to speak. For those who use this as a way to get fast cash, this
article - and whatever service Womply is providing - may be useful. For those
who use it as yet another avenue for advertising, alongside weekly coupons in
the newspaper and ads on television, this article is irrelevant.

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feralchimp
And...how is any of this a problem?

The "argument" seems to be:

\- payday loan companies are a liberal bugaboo that prey on consumers with
limited options available for securing the cash they need to feed their
children

\- zomg our competition is like them somehow, except the prey are...companies
with lots of flexibility in how (and whether) they market at any particular
time

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adamtmca
The fact that the writer hasn't actually researched an important part of their
largest competitor's business model doesn't speak well for Womply.

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rdiddy
Groupon is really good about giving credit (full value) to customers with
expired Groupons. Does Groupon still payout to the businesses when they are
essentially refunding purchased Groupons?

There is nothing sustainable about this model...but it works for me!

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jheriko
... so why is Womply any different?

~~~
username3
[http://blog.womply.com/2011/10/womply-launches-effortless-
of...](http://blog.womply.com/2011/10/womply-launches-effortless-
offers%E2%84%A2-closes-the-onlineoffline-redemption-loop/)

~~~
anothermachine
That article is Hacker-worthy for putting a TM character in the URL.

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suking
A somewhat competitor slinging mud for press - cool.

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Codayus
This is a little bit like, oh... Opera writing a blog post about how you
shouldn't use Firefox because it won't display any Google page.

...ie, it would be very important and interesting if true, but it's 1) not
true, and 2) trivially verifiable as not true.

Groupon works in the precise opposite way of how Womply claims they do; they
provide payment to the vendors well AFTER the voucher is used, not BEFORE the
voucher is used. Every single point and conclusion made by Womply is not just
wrong, but describes a world precisely opposite to the one we actually
inhabit.

I have never heard of Womply before, but apparently they're run by fools. At
best they have no clue how their competition does business. More likely they
do know, but assume that their customers don't, and feel no compunction about
lying. Either way...

