Coupon frustration

As consumers try to cut costs, stores are facing fraud woes

June 17, 2008|By Liz F. Kay | Liz F. Kay,Sun reporter

Theresa Jenkins is a coupon queen. By combining coupons with sales, she has accumulated a lifetime supply of dishwasher detergent in her garage, as well as 30 cans of tuna for a penny each.

But she was upset when a Giant Food supermarket confiscated her coupons after one she had printed from a manufacturer's Web site for Rice-A-Roni wouldn't scan properly.

As the price of food and everything else rises, consumers are increasingly turning to coupons to cut their bills. And many are finding a small but growing supply of them on the Internet as manufacturers turn to print-it-yourself incentives to get buyers to try their goods.

FOR THE RECORD - An article in Tuesday's business section about online coupons incorrectly reported eBay's policy on selling manufacturers' coupons. The Web site permits auctions of coupons with some limitations, such as banning the sale of expired coupons.
The Sun regrets the error.

But some people, such as Jenkins, have been frustrated to learn that some retailers won't honor the coupons because of an increasingly costly problem with counterfeits - including some that are bought and sold online.

"You can't say you accept coupons if you only accept certain coupons," Jenkins said.

Superfresh, part of the A&P chain, does not accept coupons printed at home at all, said spokeswoman Lauren LaBruno.Nor does Klein's Family Markets, which banned home-printed coupons after they were struck by a rash of altered coupons for nationally branded products.

It's difficult to distinguish between legitimate and manipulated coupons at the point of sale, said Howard Klein, Klein's vice president and general counsel. The thieves would replace UPC codes from legitimate coupons on ones for other products.

"We don't want people replicating coupons en masse," Klein said. "It's like cash counterfeiting."

Some chains in the Baltimore area, such as Giant and Wegmans, state that they only accept home-printed coupons for cents-off, not free items.

Others, such as Rite-Aid, will take only online coupons from their own Web sites, or limit their use. For example, Harris Teeter will not double or triple online coupons.

Moreover, individual cashiers and store managers at stores that generally accept online coupons might not always comply with corporate policies.

The result for consumers such as Jenkins, 29, who runs a day-care center at her Abingdon home, is less savings from coupons.

"With the fear that certain stores aren't going to accept them, I've used them less and less," Jenkins said.

Ron Larson, a professor of marketing at Western Michigan University, said the retailers have a legitimate concern.

Offering coupons online might seem attractive to a product manufacturer, considering national distribution of a full-page newspaper insert could cost $400,000 or more, Larson said.

However, "I have yet to hear of a technology that couldn't be compromised," he said. Manufacturers have developed security methods to limit fraud, but "the ultimate problem is the person who has to check it is a cashier at a grocery store," he said.

One fake coupon can cost retailers and manufacturers hundreds of thousands, and even millions, of dollars, said Bud Miller, executive director of the Coupon Information Corp. Retailers lose because manufacturers won't reimburse them for bogus coupons, and manufacturers lose sales when their products are given away in response to fraudulent offers.

"Unfortunately, there's been a great number of counterfeit coupons, and some stores decide to do what they need to do to protect themselves," he said.

The nonprofit, founded by major manufacturers, offers $2,500 rewards for information toward the prosecution of makers of fake coupons for free products such as Purina Cat Chow and Deer Park water - two that have been targeted. Sometimes, fake coupons are bought and sold on Web sites.

Klein's and Superfresh say they are investigating other online coupon options.

Superfresh is considering a means to link coupons to store loyalty cards.

Klein's is re-examining its policy with help from its software and hardware suppliers to upgrade its equipment to screen out illegitimate coupons.

"We know there's a lot of pressure. ... Customers are looking for value," Klein said.

More and more manufacturers are making attractive high-value coupons available online for name-brand products, said Stephanie Nelson of Couponmom. com, an online community which helps its members coordinate coupons with sales and rebates.

However, she gets e-mails from her members saying that stores near them will not redeem home-printed coupons. It might not be the corporate policy of the chain but rather a decision made by an individual store manager or cashier.

"It impacts my decision on where I shop," Nelson said. "If you can save an extra five to 10 dollars a week based on printable coupons, ... I can change my store loyalty because of that."

Online coupons still represent only a small fraction of the coupons distributed and redeemed each year, said Matthew Tilley, spokesman for North Carolina-based CMS Inc., which processes coupons for manufacturers and retailers.

More than 302 billion coupons were distributed last year, but only 0.2 percent of those were online coupons, he said.

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