Reasons to Avoid Coupon Fraud

            The use of coupons is a win-win situation that should benefit all participants. They are an excellent marketing tool for manufacturers and retailers, and offer great savings for consumers. Unfortunately, as with anything of actual worth, coupons are susceptible to misuse and fraud. With the recent rise in popularity of grocery coupons, law officials and businesses are having a tough time staying ahead of the offenders. Growing demand combined with tech-savvy criminals creates the perfect storm for illicit activity, and makes things more difficult for honest couponers.

What constitutes coupon fraud?

According to the Coupon Information Center (CIC): “Coupon fraud occurs whenever someone intentionally uses a coupon on a product that he or she has not purchased, or otherwise fails to satisfy the terms and conditions for redemption that are stated on the coupon; or when coupons are altered or counterfeited.” So, don’t freak out if, after a shopping trip, you later realize you mistakenly misused a coupon. Legitimately misreading a coupon, or forgetting to take a coupon out of your envelope when you didn’t purchase an item, is not grounds for jail time, or even a guilty conscience. The next time you are in the store, explain your mistake and make it right. More likely than not, you will be thanked for your honesty and waved off with a smile. Joanie Demer, co-author of The Krazy Coupon Lady – Pick Another Checkout Lane, Honey, had this to say: “Almost every Krazy Coupon Lady (including me!) can tell you a story of a mistake she made couponing before she knew better. The vital lesson: learn the rules so you can coupon by the rules. This makes everyone happy: the store, the manufacturer and me!” —Joanie Demer, TheKrazyCouponLady.com

Who are these criminals?

Stories of fraudulent activity are sounding more like the latest crime-thriller movie at your local cinema, than having any type of connection to an activity your grandmother would do, like couponing. These people are running highly sophisticated criminal organizations. Here are a few of the most extreme cases:

  • In July, 2012 the largest counterfeit coupon ring was busted in Phoenix, Arizona. Three women were charged with running a multi-million dollar organization. Among the things confiscated were over $25 million worth of bogus coupons, 22 assault weapons, 21 automobiles, and a forty-foot boat.
  • In 2008, International Outsourcing Services, a coupon processing clearinghouse, was indicted for ordering its employees to dump unused coupons into the stream of legitimate coupons. They scammed companies, such as Proctor and Gamble and Kraft, out of over $250 million, over a ten year period.
  • In 2011,“The Coupon Guy” was arrested by the FBI for wire fraud and trafficking in counterfeit coupons. The 22-year-old RIT student not only created fake coupons, but wrote a book and blog instructing people how to make and distribute counterfeit coupons. In 2013, he was sentenced to three years of probation, no access to computers for three years, and fines and restitution of over $900,000.

This is what Heather Wheeler of The Krazy Coupon Lady had to say: “You know that old saying about how one bad apple spoils the bunch? The same is true when it comes to couponing. Coupon fraud is a serious offense and one we avoid like the plague. To ensure proper use of coupons, carefully read the fine print, ensure proper barcodes are visible, only use the coupon on the intended product and follow the manufacturer’s guidelines to the T.” — Heather Wheeler, TheKrazyCouponLady.com

What you can do to protect yourself:

Most couponers clip their coupons from newspapers, print a few online, use coupons found inside products, and never have to worry about receiving a counterfeit coupon. Here are a few precautions you can take to make sure you don’t inadvertently commit coupon fraud:

  • Never buy coupons: There is never a legitimate reason to pay for something you can get for free. Buying coupons from sources, such as EBay, is an unnecessary risk. You don’t know where the coupon came from, if it’s legitimate, or if it came from stolen newspapers.
  • Never alter a coupon: Do not try to change or cut off the expiration date, or try to modify a coupon to make it in any way different than the way the manufacturer intended.
  • Never scan or copy coupons: Although this should be a big “duh”, it can be tempting to make extra copies of internet coupons. Doing this is not only a felony, it is very easily traced, and cashiers are trained to identify copies. Each internet coupon has a unique coupon verify code, similar to serial numbers on a dollar bill.
  • Never use a coupon after it expires: You may use a coupon on the day it expires, but not after. Manufacturers put expiration dates on coupons to control their use for marketing purposes. Stores will not get reimbursed for expired coupons. You can, however, send expired coupons to the military for soldiers to use in the commissaries up to six months after expiration.
  • Never use a coupon for the wrong size product: If the coupon states that it is for a 16 oz. bottle of body wash, don’t use it to buy a 3 oz. bottle.
  • Never use a coupon for a different product than what it was intended: Most couponers are familiar with the Extreme Couponing scandal, in which participants on the show did what is called “decoding”. Also, if a coupon states that it is for a box of original Cheerios (the yellow box), you are not allowed to use it on a box of Honey Nut Cheerios, even though it is the same company and brand of cereal. Clearly, General Mills needed to boost sales on plain Cheerios, and that is why they released a coupon for it.
  • Never use more than one manufacturer’s coupon on a product: This is clearly not the same as “stacking” coupons by using a store coupon combined with a manufacturer’s coupon. If a coupon states that it is $1 off three cans of Campbell’s soup, do not try to use it on two cans, or try to sneak two of coupons past the cashier.
  • Never use your computer to capture coupons and print multiple copies: This is called “snipping” and it’s a felony. Most coupon software will not allow an image of a coupon to show up on your computer screen, but if by chance it happens, do not take screenshots and printing multiple copies.
  • Never take coupons off products you aren’t buying: Stealing is stealing.

Consumer advocate, Jill Cataldo, had this to say: “The ethics of what we do as coupon shoppers have always been very important to me. I love the thrill of getting a great deal, but it never comes at the expense of bending or breaking the rules. We’ve all seen and felt the ‘pullback’ of manufacturers responding to the ‘Extreme Couponing” effect, which has resulted in purchase limits, lower face values, shorter expiration dates and multiple-item purchase requirements on our coupons. Marketers have shown they’re afraid of coupon abuses, and yet according to a 2012 Valassis study, less than three-tenths of one percent of coupon shoppers can be categorized as ‘extremists.’ While it doesn’t seem fair for everyone to be punished for the actions of a small few, the only way to turn things around and encourage manufacturers to offer more attractive promotions is to continue abiding by the terms on our coupons. The vast majority of coupon shoppers are not trying to beat or cheat the system, and I hope that we can look forward to brighter days ahead once manufacturers realize this too and relax some of their restrictions.”

Penalties for Coupon Fraud

According to the CIC, penalties vary based on the case and laws violated. (The CIC also hasn’t lost a case since it started in 1986.)

  • Prison sentences of three to five years are not uncommon.
  • Longest prison sentence: 17 years
  • Financial penalties generally vary, but have often been in excess of $200,000.
  • Highest financial penalty: $5 million

Is it really worth the risk just to get free laundry detergent? When people commit coupon fraud it is no different than walking into the store and shoplifting, or printing counterfeit money. Remember, when stores allow consumers to use coupons it’s a courtesy, not a God-given right. What changes have you noticed in coupons and coupon policies? Have you witnessed any heinous coupon acts?

Cash Back Resources

Additional Resources

CVS Coupons Walgreens Coupons Walmart Coupons Peapod Coupons Drugstore.com Coupons Amazon Coupons Is Couponing Worth It? Are Warehouse Memberships Worth It? Coupon Shopping in 2013: 6 Tips to Get You Started Why Making A List before Going Shopping Is Important Coupon Your Way to a Better Financial Future Coupons and the Free Ego Trip

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