South Coast Aeronautics Groupon Takes Consumer for a Ride

When a friend gifted Austin M. a Groupon for a “Hands-On Discovery Flight for Two,” from Los Angeles-based South Coast Aeronautics, he fully expected to be taken for a ride. What he didn’t expect was that the ride would last more than three months, and that he would never even get in the cockpit for the flying lesson.

The reason his feet never left the ground was an “airport usage fee” of $46.99 that was not disclosed in the $129 Groupon, not even in “The Fine Print” section of the voucher. Austin said it was only when he reached out to the merchant to arrange the flight that the fee was revealed. When he asked South Coast Aeronautics why the fee wasn’t disclosed in the Groupon, rather than answer the question, the company said in an email that Austin provided to TINA.org that “it’s a cost of doing business.”

That was in April. In the weeks and months that followed, Austin would exchange emails with more than 10 Groupon employees in a Herculean effort to make Groupon do one of three things: add the airport usage fee to the price of the voucher; remove the deal from the e-commerce site; or force South Coast Aeronautics to honor the $129 price without charging customers the added fee.

Austin shared the emails with TINA.org. After reading them, we were reminded why so many consumers regard customer service as a black hole. At different points in the “investigation,” at least five different “teams” take up Austin’s inquiry. There’s an “internal team,” a “concern team,” a “special team,” a “Service Enhancement Team,” and a “Groupon Supervisor team.” Austin reiterates that he is not interested in a refund nor one customer service agent’s proposal for “$10 in Groupon Bucks.” When the Groupon investigation concludes, the decision appears to be based on inaccurate information.

“We have investigated the case with the merchant and confirmed that the business is honoring Groupons as advertised,” Groupon tells Austin on May 23. But after Austin explains that he didn’t sign up for anything extra, such as a longer flight around LA or a specific route over the Pacific, Groupon responds: “I defiantly (sic) understand situation at this point. I’ve requested the concern team to work on this issue and I will get back to you once, I get an update on this.”

Throughout it all, Austin is adamant that South Coast Aeronautics’ undisclosed airport usage fee constitutes a blatant violation of Groupon’s Merchant Terms and Conditions, a section of which states:

Merchant agrees that in providing the Merchant Offering, Merchant will not inflate prices or impose any additional fees, charges, conditions or restrictions that contradict or are inconsistent with the terms stated on the Voucher, including the Fine Print.

Groupon sums this up in a blog aimed at prospective merchants: “When you sell on Groupon, there are no hidden costs or fees.”

That same blog, titled “How Groupon Makes Money,” may actually help explain why Groupon seemed so hesitant to side with Austin, even as others (see here, here, and here) have complained about the coupon’s hidden fees in the customer reviews section of the South Coast Aeronautics Groupon. It notes:

Groupon makes money by charging a marketing fee advertising and promoting their offers. In most cases, that fee is a percentage of the revenue generated by selling on Groupon. … we don’t make money until you make money.

According to NPR, deal sites like Groupon take about half of the total sales revenue. Groupon has sold more than 1,000 of the South Coast Aeronautics vouchers. Do the math and that’s payday for Groupon.

After Austin reached out to TINA.org, we reached out to both Groupon and South Coast Aeronautics. While we have yet to hear back from either of them, we noticed the addition of this line in the Groupon’s fine print section shortly after sending out our requests for comment:

(Click here for a before-and-after comparison of “The Fine Print” section):

But if Groupon and South Coast Aeronautics think this solves the problem, they are mistaken. Because as of Aug. 2, the price of the voucher remained unchanged and by not disclosing the actual cost of the “service fee,” consumers may still believe they are getting a better deal than they actually are. Not to mention the fine print section appears more than halfway down the page, making the disclosure neither clear nor conspicuous, which are the two things the FTC requires disclosures to be.

Find more of our coverage on hidden fees here.