Executive Briefings

Consumers Warned About "˜Deal of the Day' Sites

As the holiday buying season continues to gather steam, the Consumer Fraud Center has warned about a fast-growing trend: the sale of goods at bargain-basement prices through so-called "daily deal" sites, which can mask the sale of counterfeit or illicit goods.

Popularized by sites such as Groupon, these "daily deals" initially focused on highlighting steep discounts at local merchants seeking to build customer traffic, but have increasingly come to be dominated by third-party retailers interested in dumping large quantities of consumer goods as quickly as possible, even if those goods have not been properly verified as being legitimate.

"What makes these sites particularly risky is the liquidation of merchandise through a 'flash sale' before its authenticity can be verified," said James Lee, executive director of the Consumer Fraud Center. "You are probably safe if buying a voucher for a local restaurant, but you should exercise caution when buying 'daily deal' goods at an extreme discount."

Lee gave the example of purported luxury brand watches sold at discounts of 75 to 90 percent, along with small appliances, luxury apparel items, electronics and toys as being the most-often sold on these flash deals.

"They are not necessarily counterfeit, but a luxury watch or handbag listed for pennies on the dollar has no greater claim to authenticity if sold through a 'daily deal' site than one hawked on Canal Street in New York or Santee Alley in Los Angeles," Lee said.

Lee reiterated the center's long-standing advice that consumers should be leery of extreme discounts offered over the internet because such goods may not originate from a legitimate supply chain.

"The advice passed on for generations still holds true: If a deal seems too good to be true, then it probably is," Lee said.

Source: Consumer Fraud Center

Popularized by sites such as Groupon, these "daily deals" initially focused on highlighting steep discounts at local merchants seeking to build customer traffic, but have increasingly come to be dominated by third-party retailers interested in dumping large quantities of consumer goods as quickly as possible, even if those goods have not been properly verified as being legitimate.

"What makes these sites particularly risky is the liquidation of merchandise through a 'flash sale' before its authenticity can be verified," said James Lee, executive director of the Consumer Fraud Center. "You are probably safe if buying a voucher for a local restaurant, but you should exercise caution when buying 'daily deal' goods at an extreme discount."

Lee gave the example of purported luxury brand watches sold at discounts of 75 to 90 percent, along with small appliances, luxury apparel items, electronics and toys as being the most-often sold on these flash deals.

"They are not necessarily counterfeit, but a luxury watch or handbag listed for pennies on the dollar has no greater claim to authenticity if sold through a 'daily deal' site than one hawked on Canal Street in New York or Santee Alley in Los Angeles," Lee said.

Lee reiterated the center's long-standing advice that consumers should be leery of extreme discounts offered over the internet because such goods may not originate from a legitimate supply chain.

"The advice passed on for generations still holds true: If a deal seems too good to be true, then it probably is," Lee said.

Source: Consumer Fraud Center