Coupon Fraud Part II

by on June 8, 2011 · 7 comments

As discussed in this article about how the coupon industry is fighting extreme couponing, there are many fraudulent ways consumers have devised to use coupons for their own economic benefit. These include using a coupon for a different product within the same company, using a coupon for the wrong sized product, using photocopy versions of online printable coupons, and printing multiple coupons from multiple computers when only one coupon is supposed to be printed per household.

According to the Coupon Information Corporation (CIC), coupon fraud is committed “whenever someone intentionally uses a coupon for a product that he/she has NOT purchased or otherwise fails to satisfy the terms and conditions for redemption, when a retailer submits coupons for products they have not sold or that were not properly redeemed by a consumer in connection with a retail purchase; or when coupons are altered/counterfeited”. It is estimated that coupon fraud results in $200-$300 million in losses to manufacturers and retailers every year (estimates I found vary widely; one promotion marketing firm suggests annual losses of $500 million).

What does coupon fraud look like? Below are some examples from recent years. You may even recognize the coupon that is being discussed, as I recognized all of them from receiving emails or seeing them posted on blogs.

Fraudulent Coupon Fiascos

  • On May 11, 2011 charges were brought against Lucas Townsend who produced a fraudulent Tide Detergent coupon that cost P&G and retailers $200,000 in coupon redemptions over a 2-3 week period in December of 2010.
  • In 2008, Target sent a $5 off $25 toy purchase coupon to 85,000 customers via email. Someone changed the coupon to read “$5 off any $25 purchase”, and the fraudulent coupon went viral.
  • A counterfeit Free Doritos coupon began circulating in 2009. Frito-Lay had these removed from the websites, but then the counterfeit coupon spread very quickly by email to friends, family, and coworkers (I received one as well!), causing thousands to be redeemed at retailers around the nation. The estimated damage is in the millions of dollars, though they will not release the total dollar loss. Spokeswoman Aurora Gonzalez stated that “the dollar value of bogus coupons consumers took to retailers in just five weeks was equal to 5 percent of Frito-Lay’s yearly payout for 250 coupon offers”.
  • International Outsourcing Services (IOS), the nation’s largest coupon clearinghouse, allegedly cost providers more than $250 million over 10 years by obtaining unused coupons never touched by a consumer, mixing them with redeemed coupons, and sending them in for redemption. IOS directed its employees in a Mexican coupon processing plant to mix the unredeemed coupons with the redeemed ones. The brokers signed up stores that would claim the coupons came from them for a piece of the payback.

Manufacturers and Retailers Fight Back

Who hasn’t been ticked off because a store refuses to use a computer printed from your home? Unfortunately, that is the outcome to most coupon fraud. Some manufacturers such as Red Bull have suspended coupon programs all together due to a fraudulent coupon. Many stores have stopped accepting any internet printed coupons, such as Target which temporarily suspended accepting internet coupons in 2010 because of a ring of fraudulent coupons circulating the web. More manufacturers are adding language to their coupons that the coupon may not be auctioned for sale (at venues such as eBay).

How to Steer Clear of Counterfeit Coupons

If you are not paying attention or you do not know what to look for, then you may use a counterfeit coupon unknowingly. Here are some things to watch out for:

  • Suspect a coupon if it is high-value and/or offers a product completely for free (note: this does not mean that you cannot get a product for free, but to do this you generally need to stack sales, store coupons, and/or manufacturer coupons, which is all legal; also manufacturers will mail consumers coupons for free products to replace a defective item, as a contest winner, or for a free sample).
  • Print at Home coupons are typically legitimate if the actual coupon image does not show up on your computer screen when you press print. You can generally print two of each of these coupons per computer, and then when you click it a third time a window will pop up to tell you that you have printed the maximum allowable.
  • If you see a coupon online to print that is for a free product with no purchase necessary, it is almost always a fake coupon.
  • Don’t print coupons directly from internet coupon forums. Instead, follow the link or do a Google search for the company and that coupon in order to find if it is a legitimate money saving resource.
  • Never purchase coupons online. People who sell coupons on eBay get around this by stating that they are selling their time and not the actual coupons. But this is shady at best; I have never actually purchased coupons online because it always seemed like a bit of a hassle. But after doing all of this research, I am very glad that I haven’t and will not ever do so in the future. Interestingly enough, eBay still has a coupon selling policy that permits sales of coupons in batches not to exceed 100 coupons in total, 20 identical coupons, or 5 coupon inserts.

Other Articles You May Enjoy:

The Anatomy of a Coupon
Saving Money for the Person Who Doesn’t Have Time for Coupons
Scan Artist
Extreme Couponing: A Syndrome Developed from the Feeling of Fear
My Experience with Price Matching at Wal-Mart

{ 6 comments… read them below or add one }

optionsdude

I get coupons from Chuck E. Cheese but only because they come from the company directly after signing up at their website. The savings are pretty good. Other than those situations, I don’t use internet coupons but can see where lots of people might.
optionsdude recently posted..Updating My Silver Wheaton Trades From Last Week

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Amanda L Grossman

Hello optionsdude!

It stinks when you find legitimate internet coupons and a store won’t accept them.

Also, Chuck E. Cheese has coupons in the Sunday inserts as well (if you were looking for more!)
Amanda L Grossman recently posted..Coupon Fraud Part II

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Financial Success for Young Adults

This is terrible! I decided to start using coupons and after two weeks I stopped because of the new stipulations. They are all in place because of the people who have been exploiting the system. Very upsetting.
Financial Success for Young Adults recently posted..What is Google Wallet

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Amanda L Grossman

Bummer! I wouldn’t say quit all together–you can still save a ton of money.
Amanda L Grossman recently posted..Coupon Fraud Part II

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Sandy @ yesiamcheap

Thank you for linking to my article. I really appreciate you showing some of the large scale fraud that has taken place. People tend to think that no one gets hurt but then they don’t understand why prices keep going up or why stores change their policies. It hurts us all when people commit crimes (yes, it is a crime) just to save a few bucks or to get a free product. It’s not worth it to me.
Sandy @ yesiamcheap recently posted..Do-It-Yourself Negotiation of Credit Card Debt

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Amanda L Grossman

It was a great article!
Amanda L Grossman recently posted..Coupon Fraud Part II

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