Groupon is under investigation by the Alberta government because coupons offered by the popular online site have expiry dates which officials say contravene provincial legislation.

"That's in violation of our gift card regulation," said Mike Berezowsky from Service Alberta. "The gift card regulation was put in place in 2008 and that says that gift cards or certificates or vouchers with a specific dollar amount cannot expire."

Similar laws are in place in the other nine provinces.

Groupon's policy allows the customer to redeem an expired coupon for the purchase price as opposed to the face value of the product or service. But Berezowsky said that isn't good enough under Alberta law.

"Consumers paid for that face value. That was what they agreed to, that was what the business promised and that's what consumers should get," he said. "So regardless of what the purchase price was, we believe the consumer should get face value of the voucher."

The province launched a formal investigation after receiving a handful of complaints. If Groupon doesn't change their practices, the company could be forced to comply with Alberta law through a court order or face prosecution in court, Berezowsky said.

Discussions with Groupon have been underway for the last few months and there is hope the company will voluntarily comply with Alberta legislation before the province needs to resort to legal measures.

Expiry dates fair, business owner says

Groupon has become a popular option for customers looking for deals on things like restaurant meals and massages and businesses looking to attract new customers.

On Thursday, for example, an offer from Edmonton children's boutique Princess and the Pea allowed customers to get $50 worth of merchandise with the purchase of a $25 gift certificate.

The offer expires on Nov. 1. Owner Amy Hoffman compares the deal to a sale at a chain store.

si-hoffman

A coupon offered by Amy Hoffman's store attracted hundreds of customers within the first few hours it was posted on the Groupon site. (CBC)

"Buy one, get one free — they have a limit on their offer and when that offer expires you can't go back in the store and say, 'You know, I still want buy one, get one free," she said.

Hoffman said 800 coupons were sold within the first few hours. She believes the expiry dates are fair as customers have a couple of months to redeem the voucher.

Edmonton Groupon customer Deidre Schlotter, who has purchased about 100 coupons from a wide number of businesses, has no problem with how the company handles expired coupons.

"I think it's fair, otherwise, I think I'd probably be a little bit more cautious what I would buy if I know that I could end up just losing that money," she said.

If customers don't use the coupon by the expiry date, that's not the fault of the business, Schlotter said.

Schlotter doesn't view Groupon only as a consumer. She is the co-owner of a catering business and says she had great success with an voucher offered through the online site.