Groupon faces countersuit in Singapore over redemption deals

Daily deals site may have to fork out US$230,267 for vouchers redeemed, but not paid up, to Singapore-based Villas International which brokered the deals involving tourist accommodations.

SINGAPORE--Groupon is facing a S$290,000 (US$230,267) lawsuit filed by a Singapore company that helps vacation sites market their accommodation to tourists. 

Villas International files S$290,000 claim against payment it says Groupon owes.

In a report Tuesday by local news site SGEntrepreneurs (SGE), Villas International filed suit against the daily deals giant over delays in payment after deals have been made. Ironically, Groupon fired the first salvo in April last year with a lawsuit against the Singapore company, claiming the latter failed to honor deals made by its customers when it defaulted on payments to villas in Indonesia and Thailand. 

Villas International, however, pushed the blame to Groupon alleging it was unable pay up because many of the daily deals sites--on which it had advertised the accommodation services--did not transfer payments to the Singapore company despite repeated reminders. The company acts as the middleman for deals between tourist accommdation and group-buying sites.

Lawyers representing Villas said Groupon was bound by contractual terms to pay the Singapore company within 7 to 10 days after a deal had been redeemed. But, the Groupon site only transferred payments eight months later, said Villas' co-founder Mira Hamza. The delays caused cashflow problems for the Singapore company which put the amount owed to it by the various daily deals sites at between S$500,000 and S$1 million (US$397,011 and US$794.023). 

In April 2012, 13 Groupon sites--which did not include its Singapore outfit--filed suit against Villas claiming US$2 million in damages over losses from money paid out for customer refunds, relocations of customers to new accommodation sites, and damage to their international reputation. An injunction was placed on the Singapore company, preventing it from withdrawing cash from its bank account or liquidating its assets. This was eventually lifted in April 2013, after a judge found Groupon's evidence to be inconsistent and determined there was no basis for Villas' assets to be frozen.

According to the SGE report, the Singapore court had ordered Groupon to pay S$50,000 (US$39,701) in security for costs to Villas but despite repeated orders to do so, this amount had not been paid up. The figure increased to S$290,000 (US$230,267) in the counterclaim filed by Villas, which it said covered amounts owed to the Singapore company for vouchers sold to and redeemed by Groupon customers. 

Groupon has filed an appeal against the ruling and is waiting to hear back from the court.