Coupon Fraud
If you ask people to define coupon fraud, more often than not they'll say it's when shoppers try to pass off expired grocery coupons at a grocery store or use coupons toward items other than those specified on the coupons—toward 12-ounce boxes of cereal when the coupons say 16-ounce boxes, for instance. Or they may say fraud is photocopying or forging coupons. If you ask them to describe who perpetrates the fraud and how much their activities cost companies, they'll likely say it's senior citizens living on fixed incomes, harried mothers stretching their grocery dollars, or unsophisticated crooks trying to get 50 dollars off electronics purchases. If you follow up with the question of how much fraud hurts consumers, people will say it hardly hurts them, if at all, given product markups by retailers.
Coupon Fraud is Big Business for Criminals
What these people don't know is coupon fraud is not so much about stores taking in a few extra or bad coupons; it's about individuals and organized crime associations profiting greatly. It's about:
• Criminals redeeming pounds of 25-cents off coupons for name brand hotdogs or diapers or coffee, for example.
• Crime rings paying fund-raising groups in churches, schools, and charitable organizations to clip coupons for them.
• Retailers padding their redemptions, or fake retailers redeeming coupons for products not sold.
• Online scammers promising athletic teams or home-based businesses tremendous profits for selling bogus coupon books.
• Online organizations offering coupons in exchange for a paid membership in the organization.
• More.
Retailers, Manufacturers, and Consumers Pay for Fraud
The Grocery Manufacturer's Association (GMA) estimates fraudulent coupon activities cost manufacturers and retailers at least $500 million a year, costs they pass on to consumers through higher prices and lower promotional offers. This makes fraud everyone's problem. Consumers who buy bulk coupons online or through auctions undoubtedly receive counterfeit coupons that retailers won't redeem. This causes legitimate fundraising coupon book campaigns to become suspect, and organizations depending on sales, as well as companies producing those books, lose. Organizations that unknowingly cut coupons for organized crime can still be prosecuted for illegal activity.
Fortunately, criminals convicted of coupon fraud also pay. The Coupon Information Center (CIC), a Not-For-Profit association of consumer product manufacturers dedicated to fighting counterfeit coupons, misredemption and fraud, has driven convictions leading to 3 to 5-year prison sentences, a 17-year sentence, several financial penalties in excess of $200,000, and at least one penalty of $5 million. The CIC, GMA and other organizations urge the public to become informed and savvy about coupon fraud. Doing so will financially benefit everyone.
References
• "History of Direct Marketing." Centre for Development of Distance and Permanent Education. (accessed Dec. 24, 2009).
• "Coupons and Charities." The Coupon Information Corporation. (accessed Dec. 24, 2009).