What Is Coupon Fraud?

Using coupons is a popular and easy way for shoppers to cut the cost of groceries, personal care items and other household products, but couponing is not without its rules and regulations. It is important for couponers to understand the guidelines and stay within the legal boundaries when using coupons. Failure to do so could result in coupon fraud, which can lead to criminal charges.

Definition of Coupon Fraud

The Coupon Information Corporation (CIC) has defined coupon fraud as occurring "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."

Coupon fraud is almost always a violation of federal, state or local laws and those who participate in it face the possibility of criminal punishment.

Retailers Raise Prices to Absorb Losses

Coupon fraud and abuse end up affecting all shoppers due to the ways retailers raise prices to mitigate their losses that stem from fraud. Ultimately, therefore, shoppers pay for coupon fraud.

Unintentional Coupon Fraud

While there have been several cases of people receiving lengthy prison sentences and facing financial penalties for committing coupon fraud on a large scale, everyday couponers can unintentionally become involved in coupon fraud.

Responsible coupon users can avoid fraud accusations by understanding the most common terms of using coupons and by learning common ways coupon usage becomes fraudulent:

• Copying Coupons

Making multiple copies of coupons is considered counterfeiting, and it is against the law. When using online coupon sites that offer printable coupons, the number of times that coupons can be printed is posted on the websites, and it is important to stick to the rules. 

Printing more than the allotted number of a single coupon or making photocopies of a coupon is illegal.

• Decoding Coupons

Coupons have terms of usage which include information about the products included in the discount, and it is the responsibility of the couponer to abide by the terms. This can include not only the name of the products, but also the size, color or other specifics.

On the program Extreme Couponing, some of the original couponers that were featured decoded coupons by using them for products that extended beyond those listed on the coupons. Although the coupons were scanned and accepted during checkout, some of the couponers knowingly broke the usage agreements.

• Buying and Selling Coupons

On all U.S. coupons, "non-transferability" is part of the usage agreement. That means the coupon is no longer valid once it is transferred from one person to another. While, generally speaking, most companies do not object to people sharing coupons with friends and family members, the act of collecting coupons for profit goes against coupon usage terms and it is illegal. The risk of ending up with counterfeit coupons increases when buying coupons online.

Online sites that sell coupons often claim that the coupons are free and any charges passed on to a buyer are for the envelopes and postage used to mail the coupons or for the time involved in maintaining an inventory of coupons to sell. This type of activity, although it appears to protect the buyers legally from prosecution, is extremely transparent and would likely fail as a legitimate legal argument.

• Stealing Newspapers or Newspaper Coupon Inserts

Unfortunately, as couponing grew in popularity, so did incidents of newspaper theft. This is not a harmless activity. Everyone knows that not paying for newspapers is theft and it is wrong. It is also a form of theft to remove parts of a newspaper, such as weekly coupon insert sections. Ultimately, someone has to pay for the newspapers that are stolen. It is the small independent distributor who has to cover the cost.

Digging in the trash for newspapers that have been thrown away, also known as "dumpster diving," is illegal in most communities. Since coupons are distributed for free, risking prosecution for stealing newspapers is senseless.

Spotting Fake Coupons

Couponers can help protect this invaluable way of saving money by being alert and by helping curtail the distribution and use of fake coupons. There are certain industry standards that almost all coupons follow. Those that do not meet the following standards are often found to be fakes.

• Coupons that are for more than the actual price of an item.
• Coupons without bar codes.
• Coupons where a purchase is not required to redeem the coupon.
• Coupons that do not have conditions of usage in small print.

A good source for finding out which fake coupons are being circulated is to check The Coupon Information Corporation (CIC), which maintains an updated list online of counterfeit coupons. It is also a good source for reporting a coupon that you think could be a fake.

You can also report suspected fraudulent coupons to:

• Federal Trade Commission
• Federal Bureau of Investigation
• Internal Revenue Service
• U.S. Postal Service: US Postal Inspection Service (USPIS)

What You Shouldn't Do

What you should not do is confront anyone who you feel may be involved in distributing fake coupons or running a coupon scam. For safety's sake, let the authorities deal with it. Do report coupons you see that look questionable by sending any valuable information you have about where you saw or received a questionable coupon.

Afraid of Getting Someone in Trouble?

The authorities are looking for the big coupon scammers who make a lot of money, not necessarily the people who could innocently post a fake coupon link. Most responsible coupon users and those who post coupons online to help others would want to know if a coupon was fake.

Couponers can help protect this invaluable way of saving money by being alert and by helping curtail the distribution and use of fake coupons.