Groupon exoneration spurs customer anger

Following the completion of its inquiry, Tecom now says no further action will be taken against Groupon Middle East - prompting criticism from some users of the site. AFP

Consumers have reacted angrily to news that no action will be taken against Groupon Middle East, after Dubai authorities concluded a brief investigation into the company.

Hundreds of customers have lodged complaints against the online-deals service, accusing it of poor customer service and lengthy delivery delays.

Tecom Investments, which runs the Dubai free zone in which Groupon Middle East is registered, said last week it had launched an investigation into Groupon.

Following the completion of its inquiry, the authority now says no further action will be taken - prompting criticism from some users of the site.

Donald Glass, 46, a teacher at Zayed University in Abu Dhabi, disputed Tecom's decision.

Mr Glass ordered four security cameras in November last year, but has so far received only two.

"I disagree completely with Tecom. The authorities have a responsibility to step in and have a responsibility to customers," he said.

"They say Groupon has not done anything wrong, but they have."

Mr Glass said logistical issues at Groupon were just an excuse for bad customer service.

"There's no excuse for not getting back to the customer and saying 'please bear with us'," he said. "It's laughable."

Other users of the site also said they were disappointed that no action would be taken against Groupon.

Paula Fernandes, 30, a Dubai resident who waited three months for a make-up brush set to be delivered, said the problem was widespread.

"There were more than just a few complaints," she said. "I just do not trust this group anymore. I would not buy anything else."

Groupon Middle East is registered in Dubai Media City, one of the free zones operated by Tecom.

Amina Al Rustamani, the chief executive of Tecom Business Parks, said Groupon had not broken any free-zone rules.

"The company has not breached any compliance rules with regards to its business activity," she said.

"The issues faced by Groupon Middle East are specific to its business performance, and related to the functioning of its logistics, business development and customer service departments."

A spokeswoman for Tecom confirmed the investigation had concluded and that no further action will be taken against Groupon.

The problems at Groupon's Middle East operation come at a time of global upheaval for the website.

The company, based in Chicago, last week restated its fourth-quarter results, after it underestimated the refunds paid to merchants.

It reduced its revenue statement for the period by US$14.3 million (Dh52.5m) to $492.2m, which widened Groupon's net loss to $22.6m.

In the UK, Groupon could face court action after the Office of Fair Trading said it had broken laws relating to advertising, pricing, inaccurate offers and unfair terms.

Its Middle East operation has faced management upheaval, as the site was besieged with complaints on Facebook, with consumers bemoaning poor service.

Groupon Middle East last month parted ways with Ainsley Duncombe, its second chief executive in less than six months. In August, Mr Duncombe replaced Faisal Haq.

Branding experts said Groupon faces a challenge recovering its reputation.

Hermann Behrens, the chief executive of The Brand Union Middle East, a global brand agency, said this is especially difficult because Groupon is a young company in the competitive daily-deals market.

"They've had less opportunity to prove and demonstrate they can deliver on their promises," said Mr Behrens.

"How they respond [to consumer criticism] is going to demonstrate whether they're a brand for the future," he added.

Alexander Kappes, the chief executive of Groupon Middle East, confirmed the investigation by Tecom had been concluded.

"The company has not been found to have committed any wrongdoing in relation to its business activities and is fully compliant with Dubai and Tecom rules and regulations," he said.

He added Groupon Middle East was boosting its customer service division.

"We have listened to customers' feedback and are working hard to upgrade our infrastructure in the UAE.

"To that end, we have increased call centre capacity twice over the past four months," he said.