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SALT LAKE CITY — The abrupt shutdown of CityDeals.com has the state investigating, customers wondering how to get their money back, merchants wrestling with a public relations dilemma and a would-be business partner suggesting CityDeals could start talking for itself as early as Friday.
The site sold coupons for goods or services from businesses that hoped deep discounts would attract new customers who would then become long-time customers.
The shutdown was so abrupt that promotional emails, probably scheduled some time ago for distribution at a later date, were still going out Thursday afternoon, even though the CityDeals.com website was taken offline Wednesday. A message at the website throughout the day Thursday simply says "CityDeals has enjoyed serving you for the past four years. We are closing our doors. If you have any questions please contact merchantsupport@citydeals.com."
The emails, on the other hand, include contact information and the logo of another business, DealsthatMatter.com, which had earlier discussed a business sharing deal with CityDeals that had never been completed.
We never expected CityDeals to close the doors. That was a surprise to us. That was a real surprise to us.
–James Saccomano
Customers unable to reach CityDeals turned immediately to DealsthatMatter, which had received more than 100 phone calls by 9 a.m. Thursday, said James Saccomano, executive vice president.
"We never expected CityDeals to close the doors. That was a surprise to us. That was a real surprise to us," Saccomano said. The two companies never had takeover or merger plans, and DealsthatMatter never was in a position to make CityDeals customers or merchants whole for unpaid obligations, he said.
This week, "we've had a couple more conversations with the CityDeals ownership, that they want to right the ship," Saccomano said Thursday afternoon. "I'm hoping we see something from them, maybe as early as tomorrow."
Kevin Robison is among the customers who used CityDeals frequently. He has coupons he bought and printed from the website that merchants will not honor, and a credit on his account and other coupons he hadn't yet printed he can't get to because the website is down. "I'll bet there are 1,000 people in the same situation I'm in," he said.
CityDeals customers are also contacting their credit card companies to see if they can get their credit card carriers to undo charges made on cards used to make CityDeals purchases.
The Utah Division of Consumer Protection has launched a formal investigation. "We just started getting complaints recently, within the past two days," director Traci Gundersen said Thursday. Part of that investigation involves determining what obligation merchants have in honoring coupons CityDeals customers have paid for but for which the merchant has not received its share.
It's definitely a very tough call because customers are purchasing those deals in good faith. The way almost all of these group-deal platforms work is they're hoping to get somebody through the door that's going to turn into a lasting customer.
–Evin Catlett
"This is the first type of case we've had like this, with an online coupon merchant. It's novel for us, but we believe it falls under our jurisdiction," Gundersen said. She encouraged customers and merchants affected by the shutdown to file a complaint with the state to help its investigation. Instructions for filing a complaint are at the division's website, consumerprotection.utah.gov.
Just how many customers have unfulfilled transactions with CityDeals isn't known, and CityDeals did not respond to a request sent by email for an interview. CityDeals has 10,094 Facebook followers, an indication of the size of its regular customer base.
The immediate dilemma for merchants is whether to absorb an even greater loss by honoring the coupons CityDeals collected money for.
"It's definitely a very tough call because customers are purchasing those deals in good faith," said Evin Catlett, social media director for the Salt Lake advertising and marketing agency Richter7. "The way almost all of these group-deal platforms work is they're hoping to get somebody through the door that's going to turn into a lasting customer."
If the customer knows the coupon is in question and the merchant honors it anyway, the business furthers the loyal-customer objective. If it doesn't, "It's definitely not a win," she said. "The merchant really does need to put their best foot forward."
Email: sfidel@ksl.com
