CPGmatters: Increased Coupon Fraud Underscores Need for Better Security Measures
Through a special arrangement, what follows is an excerpt of a current article from CPGmatters, a monthly e-zine, presented here for discussion.
With the annual cost of coupon fraud estimated to be nearly a half billion dollars, coupon security was high on the agenda recently at CIC's Industry Leadership Summit.
"While most consumers are honest, you have a few individuals in that mix who understand the industry very clearly," said Bud Miller, executive director of the Coupon Information Council (CIC). "They understand the policies. They do their research, they try to game the system, and it's our job to keep that from happening."
CIC recommends a combination of coupon and return policy reviews, adoption of recommended voluntary best practices, and awareness of the abusers' tactics. The latter include internet coupon trading boards and two how-to manuals: Shoplifting Tips and Techniques IV and the How to Make Coupons manual, now in a second edition, authored by an individual who has since been arrested.
Mr. Miller pointed out that the same people are involved in counterfeiting coupons and shoplifting, and their materials are shared on the same websites. Consistently prosecuting violators will help deter both these illegal activities.
The industry has taken big steps forward by implementing the coupon DataBar, and a standardized hologram for free and high-value coupons, he notes. "If retailers take full advantage of the new bar coding system, we will resolve the issue of coupon decoding."
As a result of the "Extreme Couponing" reality TV show, which Mr. Miller said features excessive and abusive coupon practices, there have been more thefts of newspapers, which contain coupons and FSIs. Some thefts are from boxes on the street, and others from stores.
Return fraud will be a focus area for CIC in the near future. Return fraud occurs when people use high-value coupons to buy a product, or large amounts of the same product, and then come back to the store, or another store in the same chain, for a refund of the purchase price and the coupon value. If done repeatedly in different places, the perpetrator can make hundreds or even thousands of dollars in a short time, Mr. Miller noted.
Mr. Miller concluded, "By working together on security issues of mutual concern, industry participants can get the big picture, understand the nature of the threat, and find reasonable, cost-effective, practical solutions."