This was in my local paper today

[texgirl]

Oct. 25, 2003


Internet scam leads to coupon crackdown
By DARRIN SCHLEGEL
Copyright 2003 Houston Chronicle

The latest scam to strike the Internet may soon force online coupon collectors to pull out their scissors and start clipping again.

Some Houston-area grocers are refusing to accept computer-generated or photocopied coupons after a rash of fakes distributed via the Web have shown up at checkout lines nationwide.

The bogus coupons typically offer "free" items ranging from Pepsi to Tide, and they're virtually indistinguishable from legitimate offers.

Often winding up in the hands of unwitting customers, the coupons pass through store scanners undetected, leaving retailers in the lurch for thousands of unredeemable dollars.

Area grocers report few problems with the phony offers thus far, but they aren't taking any chances.

Fiesta Mart will stop honoring all online coupons in the next few weeks, even if they are legitimate, a spokesman said.

Meanwhile, Kroger has posted signs telling customers it will not accept coupons that appear to be photocopied or printed off a home computer, and Randalls reserves the right to do so as well.

H-E-B stores still accept them, but the grocer is reviewing its policy.

"We're looking at what other retailers are doing because we have the same concerns that those other retailers do about the high incidence of fraud," H-E-B spokeswoman Holly Montalbano said.

News of the policies took "obsessive" coupon saver Wendy Codwell by surprise.

Though the 36-year-old Pearland resident says only 15 percent of her coupons are downloaded from the Internet, they're for necessary -- and cumulatively expensive -- items like diapers and juice for her two children.

"I do factor in the discounts that I get from my coupons into my grocery accounting, so I think this will have an impact particularly as it relates to my baby products," Codwell said.

Coupons are big business in the grocery industry, with more than $3 billion redeemed last year alone.

But counterfeit coupons are big business, too, with fraud costing retailers between $500 million to $800 million each year, according to industry officials.

The latest scam took form last fall, then gained steam this summer, particularly in the southeastern United States.

Since then, industry officials say, the problem has spread.

"We have had reports from every corner of the country about fraudulent coupons -- down to small towns in the heartland," said Michael Sansolo, senior vice president of the Food Marketing Institute.

The bogus coupons are proliferating via online auctions and e-mails, Sansolo claims.

Coupon expiration dates and discounts are altered electronically, then auctioned or sold in bundles for prices starting below $1.

They also can be photocopied using traditional print coupons from newspapers and direct mail, then distributed on the Internet.

Coupons generally state, however, that they are void if reproduced, purchased, traded or sold.

Earlier this summer, Sansolo's group and the Grocery Manufacturers of America asked eBay, an Internet auction site, to discontinue sales and auctions of grocery coupons.

In addition to passing on counterfeit coupons, the groups say the auctions violate manufacturers' terms and conditions prohibiting the transfer of legitimate coupons.

EBay said it is working with the industry to eliminate fraudulent coupons from being sold on its site, but it has no intention of stopping other sales.

"We see no legal reason to ban them altogether," eBay spokesman Chris Donlay said.

The problem retailers and consumers have is knowing which coupons are lawful.

"You simply cannot tell the legitimate ones from the fake ones," said Bud Miller, executive director of the Coupon Information Center, a manufacturers group that fights coupon fraud.

The center's Web site, www.cents-off.com, lists about 100 bogus coupons that are circulating. Most of the offers are for free items, with one valued up to $11.99 for Stouffer's products.

A number of businesses offer legitimate coupons online, including Cool Savings and coupons.com. Consumers can download coupons from those sites and print them out at home.

Cool Savings is trying to discourage retailers from banning online coupons.

The Chicago-based company contends that the majority of fraudulent coupons are photocopied from newspapers, but it has told manufacturers that it will not let them distribute free product coupons using its site.

"What that does is enable a retailer to say we are not accepting free product coupons, period," said Matt Moog, president and CEO of Cool Savings.

The Coupon Information Center, meanwhile, is working with law enforcement agencies to stop the fraud.

The group said penalties for those convicted of coupon fraud vary by each case and the number of laws violated.

Consumers that attempt to use counterfeit coupons could be prosecuted as well.

Miller said there is an easy way consumers can protect themselves, though.

"Don't buy coupons," he said. "Don't buy something that's given away for free."

Industry officials also say they are working on new technology to prevent fraud.

If that solution is found, some retailers say, they may revise their policies.

"If they can somehow eliminate the fraud, then we would probably go back to accepting them," Fiesta Mart spokesman Bernie Murphy said.

[Sue]

Our local grocery store refuses to take them and hasn't for about a month now. It's a shame some people have to ruin it for everyone else.