How to spot fake coupons and phony work-from-home coupon clipping and certificate book schemes: Internet Scambusters #398
Today we report on a set of scams that most people haven't even heard of (fake coupons), one of which has occurred more often so far this year than in the previous 10 years combined. Further, you could unknowingly be committing fraud and wind up in serious trouble.
In fact, a bogus offer of free snack food, currently circulating on the Internet, highlights this massive increase in the incidence of fake coupons, said to be worth up to $600 million a year.
Dubious work-at-home programs that involve clipping coupons or selling books of coupon certificates also earn a fortune for con artists.
In this issue we explain how to identify bogus coupons, the risks you face if you use them, and the dangers of selling or buying coupon certificate books.
Fake Coupons and Coupon Certificate Book Scams Surge Through US
Fake coupons crime is rocketing in the US, with more types of fraudulent coupons churned out in the first few months of this year than in the whole of the previous decade.
One coupon scam in particular recently turned into a major headache for a leading food manufacturer and hundreds of retailers.
The fake coupon, widely available on the Internet, purports to offer a free $5 bag of Doritos brand chips.
The Doritos coupon looks like a genuine item and many people have innocently tried to use it.
Organized groups of dishonest consumers and regular crooks have also used them either to build up stocks of the product for resale or, when they could, to get stores to redeem them for cash.
Many grocery stores accepted the bogus Doritos coupons and manufacturer Frito-Lay initially honored the redemptions, but now they say they'll no longer do that.
Supermarkets who accept them may have to bear the loss.
In fact, this coupon scam has become so widespread that Frito Lay's parent company, PepsiCo, and a trade group, the Coupon Information Corporation (CIC) announced a $2,500 reward for the successful prosecution of whoever started this scam.
Frito-Lay spokeswoman Aurora Gonzalez told the Dallas Morning News the acceleration of the scam was shocking, adding: "Left unchecked, the impact of this fraudulent coupon could run in the multiple millions of dollars."
But the Doritos coupons are only the tip of the coupon scam iceberg. CIC estimates the crime costs between $300 million and $600 million a year.
Other current bogus offers include Hanes clothing, Dunkin' Donuts coffee, Digiorno pizzas and Oreo cookies.
Quoting CIC, the Wall Street Journal reported in March that almost 200 different phony coupon deals had surfaced -- mostly online -- since late December, more than the total for the whole of the prior 10 years.
The Internet is the key reason for the surge in the use of fraudulent coupons.
Previously, printed coupons were exclusively distributed by mail or in newspaper inserts, enabling manufacturers to print special security codes and other anti-fraud devices, such as holograms.
These are still widely used, but now, in the Internet era, many genuine coupons can also be downloaded and printed on home printers, an easy target for scammers to hijack and copy.
High resolution scanners can also be used to scan coupons for use as a template to produce phony versions.
We previously reported on coupon "doctoring" in one of our Snippets issues, Free Credit Reports: One Year Later.
The bottom line is that using a fake coupon is a fraud that could land you in court.
And according to the CIC, not a single defendant has been acquitted on a coupon fraud case that it has instigated.
So, how can you tell if a coupon is genuine or not?
For the Doritos scam, you can see examples of genuine and phony coupons on the Frito-Lay website.
You should also be suspicious of any coupon sent to you as an email attachment or offered for sale, or one offering a deal that simply seems too good to be true.
And you might be able to spot a phony or doctored coupon by checking the supposed value of the coupon with its barcode -- the 10th and 11th digits should match the value.
More Coupon Scams
As if all this wasn't bad enough, there are several other sinister sides to the coupon scam business aimed at consumers and would-be home workers.
Bogus free or cheap gasoline coupons: Usually a telesales solicitation offering a $200 set of coupons, or a discount card, for just a few bucks. It may be a prelude to identity theft -- you have to pay with a debit or credit card -- or your card is charged for numerous items that exceed the value of the coupons.
Work from home coupon-clipping scams: The job may be legit -- you get paid to clip coupons from newspaper inserts -- but the claims you can make a fortune doing this are false.
And keep in mind what we pointed out above: coupons are not sellable or tradable, so why would anyone want them? Possibly for the next scam...
Selling coupon certificate books: This is both a work-from-home scam and a consumer con trick.
As a business, victims, who may be individuals or charity groups, buy large numbers of coupon certificate books, supposedly worth $500 each, that they can then sell for up to $50 apiece.
Inevitably, they don't sell many and end up out of pocket.
Consumers who buy the books find they have to submit the certificates, with a hefty processing fee and postage costs, to get their hands on the actual coupons, some of which may expire by the time they arrive.
Again, given that coupons are not tradable, the legitimacy of these certificate books is dubious to say the least.
Genuine coupon book programs do exist, where groups of traders band together to offer discounts in a particular locale -- but these usually contain coupons, not certificates.
Often, too, these are distributed free of charge or sold to raise money for a local charity -- easy enough to check out.
But if you are tempted to get involved in any coupon or certificate book program, CIC advises that you check out the organization with the Better Business Bureau.
You should also check with the company what your total cash outlay will be and if they will refund money for any books you don't sell.
As a consumer, if you're considering buying a book, find out what additional fees you'll have to pay to redeem the certificates or coupons.
You can get more information on these and other types of coupon scams from the FTC Facts for Consumers.
Incidentally, the Frito-Lay name also crops up in another home-working scam -- one that doesn't involve coupons.
The firm says victims of a mystery shopper scam receive bogus checks bearing its name and logo, part of which they're supposed to wire back to a supposed research company.
This is an advance fee scam. You can read more about this crime and mystery shopper scams in earlier Scambusters issues.
In these hard-pressed times, we're all looking for ways to both save and make money. Opportunities may be scarce but that doesn't make a coupon scam a route worth even considering.
That's it for today -- we hope you enjoy your week!