Dubai authorities have launched an investigation into Groupon Middle East after a slew of protests over poor customer service.
The online-deals company has been inundated with complaints from hundreds of dissatisfied customers who have faced delays to orders.
Groupon Middle East is registered in Dubai Media City, one of the free zones operated by Tecom, which has launched the inquiry into the complaints against the group-buying site.
"We are investigating the matter," said Amina Al Rustamani, the chief executive of Tecom Business Parks. "We will be in touch with Groupon to understand how we can sort out the issue … We need to understand what the issue is, and the type of complaint, before we take any action."
Tecom is part of Dubai Holding, the conglomerate owned by Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai.
Authorities from Tecom plan to meet Groupon officials soon, Ms Al Rustamani said. She added it was too early to elaborate on what action Groupon Middle East could face.
Despite the number of complaints lodged against Groupon, Ms Al Rustamani said it was important to establish who was responsible.
"People blame Groupon, but you have to be very fair and clear as to what the issue is.
"You have many stakeholders involved … It's very difficult to say where the problem is. Is it a problem with the retailer or Groupon?"
The site has been besieged with complaints on Facebook, with consumers bemoaning poor service. The problems have coincided with management upheaval at the firm.
Groupon Middle East parted ways this month with Ainsley Duncombe, its second chief executive in less than six months. In August, Mr Duncombe replaced Faisal Haq.
"The challenges for Groupon run much deeper than regional management. It appears that the company has become the victim of its own tremendous growth," said Tarek Sultani, a director at Landor Associates, a branding consultancy.
He said Groupon globally had seen a lot of changes in its senior management in the past year. The website, which launched a US$13 billion (Dh47.7bn) initial public offering on Nasdaq last November, is among the biggest players in the United States, but has found trading in new markets difficult.
The Office of Fair Trading in the UK this month found Groupon had broken laws relating to advertising, pricing, inaccurate offers and unfair terms. The company could face enforcement actions by UK courts.
"The issue for the Groupon business model is that it puts the Groupon brand into the mercy of its partners," said Mr Sultani. "When Groupon advertises an offer for a company, and that company does not deliver or keep up with the customer's expectations, the backlash and responsibility falls on Groupon."
Ms Al Rustamani said Tecom granted licences for businesses in specific fields.
She added that Groupon was more of a promotional or marketing business than a retailer. "We have to be careful on how we interpret this complaint, and what it means from a licensing perspective. After understanding what are the main issues, and how it is linked to their activities they are licensed for, we will discuss it with them."
Groupon said it was not aware of any inquiry into its practices.
"We have not been informed of an investigation by Tecom or any other authorities in the UAE.
However, should this be the case, we will cooperate fully with Tecom and work with the authority to ensure any concerns raised are addressed," said Simon Pugh, the head of marketing and public relations at Groupon.
"Ultimately, we want the Groupon experience to be the best possible for consumers and small businesses, combining excellent experiences and offers with good customer service. We welcome feedback from our customers that will enable us to make changes and ensure that the Groupon experience is a positive one for customers and merchants alike."
rjones@thenational.ae
