Counterfeiting Continues to Roil CPG Brands
By John Karolefski
A news alert at the top of the website of the Coupon Information Center (CIC) reads: “World Finer Foods Withdraws Coupon Offer Due to Counterfeiting.” Clicking on the headline brings the reader to a Public Service Announcement (PSA) exposing the counterfeit paper coupon. It includes a photo of the coupon presumably from World Finer Foods, a Bloomfield, N.J.-based distributor of more than 1,000 owned and third-party premium food, beverage and personal care products.
“World Finer Foods has withdrawn the coupon offer reproduced below due to counterfeiting,” the news alert announces. “Retailers should not accept this coupon, or variations of it, under any circumstances.”
This PSA was provided by World Finer Foods and CIC, a not-for-profit organization dedicated to enhancing the integrity of the coupon redemption process. PSAs for some 50 counterfeit paper coupons have been posted on the CIC website during the first half of this month. Hundreds upon hundreds have been posted this year. The site is updated daily.
“Counterfeits are coming hot and heavy,” said Bud Miller, executive director of CIC. “There are continued economic challenges in the country that spur people to doing this. People are always looking for ways to save a dishonest dollar.”
Coupon fraud occurs in several ways:
- When a person intentionally uses a coupon for a product that he or 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.
- When coupons are altered/counterfeited.
These activities typically violate Federal, State or local laws. Coupon fraud costs CPG manufacturers hundreds of millions of dollars every year. It also increases costs for consumers and makes it more difficult for honest consumers to use coupons legitimately.
While CIC attempts to list as many counterfeit coupons as possible on its web site, Miller said not all the fake offers in circulation are listed for three reasons:
- It takes time to identify, and to confirm the status of, new counterfeit coupons.
- Some manufacturers may prefer not to have their counterfeit coupons listed.
- The premature disclosure of some counterfeit coupons may jeopardize law enforcement investigations.
The Internet is helping to increase counterfeiting, according to Miller. “People are sharing ideas, concepts and cheating techniques on social media. Companies that run the social media sites are less than cooperative.”
About 18 months ago, CIC made available a special gold hologram, which is a three-dimensional photographic image printed on a special foil, to be placed certain coupons.
“It’s helpful for high-value coupons and free-product coupons,” said Miller, “but it’s a voluntary best practice. Some manufacturers will use it, and others won’t. There are advantages [to the hologram] in that it keeps the more amateur counterfeiters at bay.”
Miller said the hologram is instantly recognizable, and cashiers will be able to identify it on free-product or high-value coupons.
CIC provides education and current information to consumers, best practices to retailers, advocacy for manufacturer members, and resources and support to law enforcement.
CIC leads efforts to reform and improve security practices, enhance transparency, and open communications among all industry participants. CIC’s Annual Summit every March brings leaders from the industry, representing diverse specialties, for proactive discussions on developing issues and trends affecting coupon security.
Since its inception in 1985, CIC has:
- Exposed fraud schemes involving more than $750 million
- Identified thousands of individuals and entities misusing coupons
- Addressed new and emerging coupon challenges prior to becoming endemic
- Recovered and returned millions of dollars to victims
- Supported the prosecution of every significant coupon fraud case since 1986 – and never lost a case.