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Shady coupon practices

The recent bust of a multimillion-dollar counterfeit operation focuses attention on the ethics of saving money.

By Donna_Freedman Jul 16, 2012 3:00PM
Image: Coupon (© Tom Grill/Corbis)What may have been the largest coupon counterfeiting ring in U.S. history was shut down July 10 when police arrested three women in Phoenix. It isn't clear how much the trio may have cost retailers, but it could be as much as $600 million over the past four years. About $25 million worth of phony coupons were on the premises when police arrived, according to this ABC News report.

The fake coupons looked surprisingly legitimate. Allegedly, the women were having them printed overseas for sale online.

What does this mean to consumers? For starters, the chance of being arrested for fraud.

If you've ever bought coupons online, some or all might have been counterfeit. Or maybe some were stolen by those folks who swipe ad inserts from newspapers.

More to the point: It is illegal to buy or sell coupons, according to the Coupon Information Corp., a group representing manufacturers that issue coupons. (Post continues after video.)

Then why are they bought and sold so openly online? Sellers get around the law by claiming they aren’t being paid for the coupons but for the time they spent clipping them.

Avoiding the fakes

Phoenix resident Melissa Hurst has been teaching coupon classes as part of the Savings Nation program, sponsored by the deal site. Ever since the coupon bust, she's been hearing from former students who want to know how they can avoid counterfeits.

In a recent post on her blog, Saving Cents With Sense, Hurst posted some warning signs of counterfeits: 

  • The coupons are extremely high-value -- $3 off, $4 off -- or for free products. (Generally speaking, free-product coupons come directly from manufacturers.)
  • Faulty fine print. Most coupons specifically state that they may not be bought or sold, but counterfeits often omit this statement.
  • Long expiration dates. Counterfeits often appear to be good for a year or more.

Hurst also linked to a long list of confirmed counterfeit coupons. If you've ever bought coupons online, you might want to check that list -- as noted above, those who use counterfeits are subject to arrest.

Nervous yet?

"Follow the rules and you won't have to worry," Hurst says. "If you're getting a coupon from your newspaper or printing it from a well-known site, you can be pretty sure it's legitimate. But if you're buying a coupon, how do you know it's not fake?"

Why it's wrong

Would you think it's OK to grab a handful of dollars from a store's cash register? Using a counterfeit coupon is stealing, too, either from a retailer (which might not be reimbursed for fakes) or a manufacturer (if it unwittingly pays out).

Some consumers don't see it that way, according to Chicago Tribune columnist Greg Karp. They're too focused on getting products cheaply or free.

"But that can create overzealous shoppers who develop an us-against-them mentality," Karp writes, making it easier to rationalize fraud.

Ethics aside, theirs is a very small-picture outlook. The more money retailers and manufacturers lose, the more prices will continue to rise -- and that affects everyone, including coupon users.

Besides, is getting $3 off a bag of chips worth the risk of arrest? Hiring an attorney would probably negate a lifetime of buy-one-get-one savings.

To recap: It is illegal to buy coupons. Don't do it. If you've already done it, at the very least check your stash against that counterfeit list. Better still, shred them and start fresh with the coupon inserts in next Sunday's newspaper. That is, if some coupon thief hasn't gotten there first.

More on MSN Money:

Jul 18, 2012 3:48PM
It's a shame, but a lot of the money saving books by popular bloggers encourage peole to buy their coupons online, and say how they do it all the time, buying on ebay... while yo umight not be able to get quite as good of a deal, and buy 20 copouns for something that you want, see about getting multiple copies of the paper. We had to prepay a year, but got 3 copies of our sunday paper fo 75 cents each instead of the usual $2 a paper. Sadly, in regards to that, since we plan to move next summer, that might be 6 months we've lost, if we can get them transfered over to a family member, but, the savings have been incredble, and I hope that in our new state, I can do something similar, because I've gotten rather spoiled with all those coupons.
Jul 23, 2012 4:52PM
Coupon fraud trickles down and hurts those who can least afford it. Many of the folks in my coupon trading group consist of young families living on low to moderate incomes. In most cases these folks have made the decision to have one partner home raising children. Living on one income has never been easy.

Increasing coupon fraud begets more suspicious store managers/clerks and more restrictive, stringent, difficult coupon policies to abide by.

I can see how people would be tempted to defraud but it hurts those of us honestly trying to save a buck.

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Donna Freedman's Frugal Nation blog is for readers who want to live cheaply -- whether due to necessity or a lifestyle choice. It explores living sustainably and making life more meaningful at the same time.


Donna Freedman

Donna Freedman, a writer based in Anchorage, Alaska, writes the Frugal Nation blog for MSN Money. She won regional and national prizes during an 18-year newspaper career and earned a college degree in midlife without taking out student loans. Donna also writes about the frugal life for her own site, Surviving and Thriving.