DEAR JILL: If a shopper uses a fake coupon to buy laundry detergent, who pays? I used to think the store would take the loss, but a friend who works at a supermarket told me that most times, the brand will pay the store anyway for the fake coupon when they submit it for reimbursement so the store does not lose money. It doesn’t quite make sense to me. Can you explain? — Rosie D.
Using counterfeit coupons hurts nearly every party involved in the transaction. Less scrupulous shoppers who knowingly use a counterfeit coupon may feel they aren’t hurting anyone and the allure of getting away with a free item is worth the risk.
However, using a counterfeit coupon is not much different from using a counterfeit dollar bill. It’s a crime, and you may face severe legal consequences for passing a counterfeit if you are caught.
That said, if a store’s cashier accepts a counterfeit coupon, what happens next? Let’s assume that the store doesn’t yet know the coupon is phony. Unfortunately, counterfeiters use sophisticated methods to create counterfeit coupons that may scan and be accepted at the register. Once the store accepts a coupon, they’ll submit it to the manufacturer of the product for redemption.
The manufacturer’s coupon processor identifies all coupons from a specific manufacturer, collects payment from that manufacturer and reimburses the store for the coupons that it accepted.
Once the phony coupon reaches the clearinghouse, it’s identified as a counterfeit. Of course, the manufacturer doesn’t want to reimburse the store for a coupon that is not legitimate, but the store also does not want to lose money on the coupon they accepted, believing it was a legitimate offer.
The coupon processor may go back and forth, denying reimbursement to the store for the counterfeit coupons, but the retailer does not have to accept the loss and can counter the manufacturer’s action.
The manufacturer also wants to maintain a good relationship with the store for current and future promotions, so you may find it interesting that the manufacturer often bears the ultimate burden of absorbing the loss, instead of the store.
A March 2021 Inmar study notes that 64% of manufacturers of consumer packaged goods use their own marketing funds to cover deductions of counterfeit coupons. Think of a brand’s marketing funds as a pool of money that the brand uses to pay for promotions that we all enjoy.
This money pays for the coupon campaigns we find in our newspapers, on printable coupon websites, and even electronic coupons found in store apps or on their websites. This money also pays for promotions like temporary price reductions during store sales.
(An aside: Did you know that some sales are actually funded by the brands and not the store itself? A brand may want to lower the price on an item to make it more attractive to shoppers, creating a sale that they themselves ultimately pay for.)
So, a brand’s marketing funds pay for all kinds of promotions that directly benefit us, the consumers. Now, when the brand has to use some of these funds to reimburse stores for counterfeit coupons instead of creating more discount promotions for consumers, all of us lose. We miss out on future coupon campaigns and sales that may have come our way, as there is less money in that “pot” to be used for future promotions.
I continue to be disturbed by the idea that no one gets hurt when shoppers use counterfeit coupons — especially the concept that “these companies are big; they can afford it.” This statement is actually espoused as an oft-repeated justification for fraud on unethical coupon forums. However, there is a direct correlation between counterfeit coupons and higher prices paid for everyone.
Think about the high-value coupons and sales that may have come our way if our brands were able to keep more of their marketing funds for their intended purpose — promotions. It’s yet another reason why it’s important to coupon ethically, only seeking out and using legitimate coupon offers.