Coupon Fraud

Coupon Fraud and How to Avoid it

When looking for deals online and in the real world, it can be tempting to try and cheat the systems designed to bring in new customers. Coupon fraud is one way that a consumer or malcontent can find themselves in legal trouble when sidestepping important guidelines in pursuit of the best deal. It’s easy to understand why someone would want a better price on that one coveted item, but it is important that you, the consumer, understand that fraud can lead to serious problems-even criminal charges.

What Exactly is It?

If you have not come into contact with coupon fraud in any way, it can be hard to imagine what it would look like, exactly. Thankfully, there is a Coupon Information Corporation that exists solely to help consumers understand how to protect themselves from fraudulent deals.

They define coupon fraud as an action that occurs, "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."

As you might be able to tell, this is a very difficult activity to stop because it is so hard to tell what is promotional material and what isn’t.

Here’s an example of coupon fraud in today’s market:

Lately, there has been a coupon floating around that claims to offer a free $5 bag of Doritos tortilla chips. For the most part, it appears to be genuine. Certainly, to a layman, there would be nothing that might stop you from cashing in on the deal. To that end, many grocery store chains began accepting it and giving out the free chips.

Of course, the mechanisms in place that honor these coupons didn’t actually exist. The coupons were frauds. Frito-Lay, the corporation “responsible” for the coupon began reluctantly redeeming the false offer. But even they eventually stopped once the costs became unbearable. Before the dust is settled, the Coupon Information Corporation estimates this fraud and other fraudulent coupons might cost the industry between $300 to $600 million a year.

Different Paths to Coupon Fraud

So, how exactly does it happen? There are a few different ways that someone can commit coupon fraud:

Decoding Coupons:

Decoding can be described as a consistent effort to enlarge the scope of an existing coupon. It typically entails fraudulent behavior that is designed to confuse and defraud retailers into providing discounts on items that do not qualify.

Copying Coupons:

This is the most typical method of producing fraudulent coupons. Creating a large amount of fake coupons and handing them out as a promotional deal is illegal and more common than you’d think. There are some websites that purchase the rights to printing certain coupons, but for the most part, printing coupons en masse without authority is frowned upon.

Transferring Coupons:

Coupons are non-transferrable, meaning they cannot be used as currency and be traded from one party to another. If you collect coupons for the purpose of selling them and do not have license to do so, it is considered illegal. This is why purchasing coupons can be so touch-and-go.

How to Prevent Coupon Fraud

If you are a regular user of coupons, this information might seem frightening. However, there is no reason to be stop clipping coupons. Here are some common sense ways that you can avoid the trouble yourself:

Don’t buy coupons. There are plenty of ways to access deals naturally, and it is typically a poor economic choice to purchase them in any capacity. Stick to the internet and the papers, selling coupons is the primary way that fraudulent coupons are distributed.
Don’t download coupons from forums that you don’t trust. If you come across a coupon due to a random google search, don’t assume it is legitimate. Do some research first, but overall these are mostly fraudulent.
Beware of spam emails. If a friend emails you about deals and has a bunch of downloadable coupons--and they’ve never done this before--it’s likely a fraudulent coupon. Or worse, it’s an email phishing scam.
Compare a suspicious coupon to a counterfeit coupon database. There are many of these available, like the one at the Coupon Information Corporation.
Never Photocopy a Coupon. When a coupon is printed, the IP address of whatever device printed is saved in the barcode of the coupon. If you try to make a copy of that barcode, the computer system will likely reject the coupon after a set amount of uses.

Above all, don’t worry too much. You need to protect yourself as a consumer, but for the most part, any fraud you will find yourself in will be Unintentional Coupon Fraud. Being the victim of a coupon scam won’t send you to jail. But it can be embarrassing to budget for an item that is discounted by a nonexistent coupon.

Reporting Coupon Fraud

If you find yourself a victim of coupon fraud or know someone that is getting in over their head, there are steps you can take to help authorized agencies crack down on this illicit activity. As a consumer, you have first-hand knowledge of the coupon world and can do much to help. Companies tend to pass the loss back down to the consumer, so you would be doing a great public service. In fact, the Coupon Information Corporation offers a $2500 reward for those who can provide information to stop scams like the aforementioned Doritos coupon scheme.

Here are some agencies that would appreciate your help:

Remember: There is never any reason to commit coupon fraud. The possible fines and risk to your criminal record are not worth it.

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