Setback for ‘Coupon Fairies’ in Major Fraud Case     

By Jack Grant

A federal judge has handed Quotient Technology a sweeping victory in a lawsuit against a couple that the company had accused of fraudulently printing and selling coupons from, Quotient’s flagship consumer site.

Magistrate Judge Nathanel Cousins of the United States District Court, Northern District of California, handed Quotient a complete victory in its suit against the so-called “Coupon Fairies,” who sold Quotient’s coupons on Instagram under various usernames.

Coupon Fairies, also known as IP Fairies, are individuals who sell internet printable (IP) coupons largely in bulk. They are not digital coupons, but coupons printed at home.

The court issued a permanent injunction against the defendants, enjoining them from using the Quotient Promotions Network, selling Quotient’s coupons, and using or selling the means by which they improperly obtained Quotient’s coupons. In addition, the court awarded Quotient more than $113,000 for damages, attorney fees and other costs.

“We have demonstrated our commitment to aggressively fight those who commit coupon fraud,” said Steven Boal, CEO of Quotient.

This decision stems from a lawsuit filed in October 2016 by Quotient against a defendant then known only by Instagram usernames. After successfully identifying the real names of the defendants, Quotient amended and served its complaint and fought off a baseless motion to dismiss the case, leading ultimately to this victory. Quotient accused the couple of violating the Computer Fraud and Abuse Act, known as the CFAA, along with other allegations. The defendants have 30 days to appeal the ruling.

This is a second win for Quotient this year. In a separate lawsuit, the company was able to enjoin another coupon fairy from accessing or selling Quotient’s coupons.

“IP Fairies have been around for a while,” said Bud Miller, executive director of the Coupon Information Center (CIC). “It has become more popular because it was on social media, particularly on Instagram. But immediately after the lawsuit was filed last year, a lot of the IP Fairies either stopped doing business or went underground.”

Miller said IP Fairies are involved in “a civil issue at minimum, but potentially a criminal issue.”  CIC has already posted about the lawsuit on Instagram. “One of things we want to do is to let people who are engaged in these activities know that the industry can and will defend itself.”
CIC encourages and supports federal, state, and local law enforcement efforts to identify, investigate, and prosecute coupon misredemption.

                                               Early August 2017