VANCOUVER, British Columbia – October 9, 2012 – BC-based daily deal website, www.gosango.com is closing in October, leaving consumers wondering if their deals will be honoured and businesses out of pocket for the promotion. Better Business Bureau (BBB) suggests consumers inquire about refunds and to check directly with vendors to see if promotions will be still accepted.
“Businesses first reported that the daily deal website, GoSango.com was not providing payment to vendors who participated in daily deals earlier in 2012 costing some businesses thousands of dollars in losses. While group buying websites are popular ways for promotion, this is an example of how it can cost businesses money in the end,” says Better Business Bureau serving Mainland B.C. President and CEO, Danielle Primrose. “We encourage consumers to inquire about refunds and for businesses to honour deals, if possible, as a goodwill gesture.”
Daily deal websites offer products or services at a reduced price on the condition that a minimum number of consumers buy the deal. Consumers who purchase the special offer are then given a voucher to take to the business to claim their discount or are given a promotional discount to purchase a product. Businesses participating in a daily deal allow a website like GoSango.com to process payment from the consumers who subscribe to the offer, with the promise that the business get a percentage of the deal profits returned to them.
According to BBB reports, Gosango.com did not provide some of their participating vendors with full payment, as per the contractual agreement, and is now closing down its website at the end of October 2012.
In an investigation, BBB found out that GoSango.com sold the mailing list to another daily deal website, SmartBetty.com, but the company only bought the mailing list and not the legal liabilities, brand or website of GoSango.com. Smart Betty Inc. is headquartered in Ontario, but has a local franchise in Kelowna.
The owner of GoSango.com is Michael Minor, who made a statement of admission on December 18, 2011 to the BC Securities Commission, admitting to have “traded and distributed $3.2 million worth of Photo Violation Technologies Corp. securities without being registered or having filed a prospectus, and when no exemptions from the registration and prospectus requirements applied”, and in doing so contravened B.C.’s securities laws.
BBB has been in contact with several businesses that participated on the Gosango.com and found that several companies paid about $5,000 each on promotions run on the website. Some companies have received full and partial payment from GoSango.com.
If looking to purchase a deal through a daily deal website, BBB recommends the following to consumers:
Check out the business. Thoroughly research the business offering the special. Utilize BBB Business Reviews to see the company’s BBB rating and any history of complaints. Call the local City Hall to see if the company is operating with a business license.
Read the fine print. Make sure you fully understand the terms and conditions that come with the offer. Not every business has the same policy and those changes may be reflected in the offer details.
Verify the refund policy. Before making a purchase, consumers should know the stipulations for receiving a refund. Make sure to understand both the business refund policy as well as the refund policy of the collective buying site.
Pay with a credit card. Credit cards offer additional protection in the case that you do not receive your products or coupon promotion. For non-delivery of goods, you can request a credit card chargeback.
For businesses, BBB offers the following advice regarding participating on daily deal websites:
Do your homework. BBB recommends that businesses do their homework before participating and know the history of the owner especially if you entering into a new deal website. Look up owners to see if there are government actions, court cases, or any poor marketplace records online.
Look behind the numbers. Do some analysis as to whether your next group buying deal will be profitable for your business. While it may be nice to see a spike in the number of customers, daily deal websites expect businesses to offer a deep discount on your goods and services. The group buying site will also ask for a percentage of the profit for hosting your deal. In the end, you have to as yourself if you are making enough on the deal to warrant the extra work that comes with customers.
Consider if you can handle more business and honour your offer. Group deals will get customers in the door, but after that your company’s needs to shine by delivering on the promises in a timely and productive way. Failure to provide products on time or provide a good customer service experience could not only cost you repeat customers, but could harm your reputation.
Be reasonable and set limits. Keep control of your offer by setting limitations of your offer. Look at how long you plan to keep honouring the deal, limit the number of customers or products you can sell, so that you are comfortable your company can meet the demands of your new and existing customers.
To check the reliability of a company and find trustworthy businesses, visit Better Business Bureau’s website: www.mbc.bbb.org.