Groupons A Great Deal, If Customers Get What They Paid For

LOS ANGELES (CBS) — Is it really a deal if the you don't get the product you paid for?

When you buy a $50 deal on Groupon for $20, the merchant only makes about $10 and may possibly earn your future business. Groupon collects the other $10.

The consumer really is the winner – but only the company can deliver on its promise.

"'Are you with Groupon,'" Christine Remo was asked, "and I say yes and she says, "'What a nightmare.'"

Remo of Newport Beach purchased two $20 Groupons -- a $100 value -- from The Paper House, a stationary store in Costa Mesa.

"I liked personalized stationary so I thought, 'I'd use something like that!'" Remo said.

She placed the order for custom-made note cards in person and was told her stationary would be ready in three weeks. It was perfect timing, since part of her order was a gift for a friend.

"So three weeks went by and 4 weeks went by and I thought, 'Where's my stationary? So I started calling and again I couldn't get any answer on the telephone.'"

In fact, Christine was never able to reach The Paper House by phone. When she drove 15 miles to the store's location to inquire about her order, she says she was told it wouldn't be ready any time soon.

"My jaw dropped and I said, 'Months? What do you mean months? I was told three weeks,' and she said, 'Oh no...we must have gotten a thousand responses from Groupon.'"

Remo feels The Paper House should have been up front with her about the overwhelming demand created by the Groupon deal when she originally placed the order.

"Don't tell someone that it's going to be three weeks. Tell them, 'I've got to tell you, this could be a problem...let me explain what happened.' I would have been more than happy to wait...just tell me."

Remo filed a complaint that day to the Better Business Bureau which gave the company an "F" rating for seven outstanding complaints. Within days she received her order but feels badly for the dozens of other customers still waiting and blogging about it.

"When I went on to Yelp it was a nightmare," Remo said.

Not only did customers complain on Yelp...so did the owner of The Paper House, who declined to speak with us on camera.

She wrote that participating in Groupon was the worst business decision she'd ever made...that she was ill-advised by Groupon when they estimated she'd sell 300 deals but sold 1,018 instead.

Business journalist Rocky Agrawal says The Paper House is not alone. Groupon encourages merchants to sell as many vouchers as possible.

"For a lot of service businesses it can be really hard to fill the demand. I've heard of a story of a salon in Austin that used Living Social which is a Groupon competitor. They sold somewhere between 3,000 and 5,000 vouchers for the salon," Agrawal said.

Too many spa treatments to handle...it would have taken them 2- 3 years to fulfill the vouchers. The salon closed its doors.

"If you're calling up expecting to get a salon appointment in the next week...it's not going to happen....so you have to be prepared for that," he said.

If you find yourself in this situation, shopping expert, Michele Ashamalla says Groupon is great about refunding vouchers or giving back credit toward future deals. She also recommends taking the time to research a company on sites like Yelp and Google and encourages reading through fine print carefully for restrictions and expiration dates.

"I think people feel pressured to buy it because of the time crunch," Ashmalla said. "There's a psychological feel like, I better get in there."

Christine Remo also recommends asking friends and neighbors if they liked doing business with a local merchant before purchasing the deal.

"There's no such thing as the last good deal and don't be afraid of losing the deal because you're taking a little extra time to do some investigation," Remo said. "It's not worth it. I mean I finally got my stationary but look what I had to go through!"

The Paper House still does not have an operating business phone.

We called the owner's cell phone, who explained customers can email or walk in to do business.

She also says they are still filling orders from last September's Groupon.

We should mention that Christine Remo was pleased with how her personalized stationary turned out, once she picked it up.

Groupon did not respond to our email request for an interview.