I have been using coupons for a good part of my life and they work well. The secret is to read the fine print. Coupons after all are marketing gimmicks and will always have a catch.

I think this requires a two step action
1) Merchants – instead of creating random deals, focus on creating great offers for your customer. Merchants should not focus on milking the customer with the first transaction. It is the recurring transaction that matters most. Use the deal to get customers, provide great products and/or service. Customers will come back for more. Monetize that.
2) Deal sites – be transparent and clear in your offering. Terms & conditions should be stated clearly upfront. Quickly address any unhappy customers. Listen to your customers and you will benefit in the long run. One dissatisfied customer can create more just by word of mouth.