"Coupon Surf Day" Finds Fraud on the Internet: Advertisers Targeted for Warning Messages

The Federal Trade Commission and the Coupon Information Center (CIC) today announced the results of a Coupon Internet "Surf Day." Fifty-one Internet advertisements were identified as potentially fraudulent coupon-related schemes. The advertisers were sent e-mail messages warning about the consequences of running such schemes. The targeted sites fall into two categories of business opportunities. Some of the sites offer a work-at-home coupon clipping scam, where consumers are told that they can earn substantial amounts of money clipping coupons. Other sites advertise a business opportunity where consumers are told that they can make money by selling to others "coupon certificate booklets." The consumers purchase the booklets at a "reduced" price and then sell them for $20 or $50 to others. The problem with the coupon certificate booklet business opportunity schemes is that they often make exaggerated earnings claims. Also, the certificates in the booklets carry significant restrictions on where and when the coupons can be redeemed. Investigators from the FTC along with industry members of the CIC, a non-profit entity that combats coupon fraud, conducted the "Surf Day" on May 20 and May 21. The joint effort, FTC officials said, is part of a larger campaign to police fraud on the Internet.

"People are being mugged in their own homes on their computers," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. "With the use of the Internet, fraud artists have penetrated the sanctity of our homes. Surf Days let the FTC use the Internet to warn potential scammers who would destroy its marketplace credibility. While fraud artists might try to take advantage of the Internet to perpetrate a fraud, the Internet also makes them susceptible to very quick and sure detection," Bernstein said. "The bottom line: 'Clean up your act or close down your site.'"

The FTC has conducted Surf Days targeting other types of scams as well, including pyramid schemes, credit repair schemes and other business opportunity schemes. "The Internet is not going to be a new arena where scam artists can roam free," Bernstein added. Bernstein noted that the effort's objective is to educate businesses using the Internet about the law and deter those who may be violating the law from continuing to do so. The FTC has brought dozens of cases in recent years challenging advertising on the Internet.

"The people who can least afford it are the ones hurt the most by coupon-related scams," said Bud Miller, Operations Manager at the Coupon Information Center. "There was a time when crime was committed basically on the street, but with the Internet, scam artists are reaching more people," Miller said. "People who are trying to work at home and raise children, retirees, individuals with limited income opportunities, small businesses trying to establish themselves as well as any number of school fundraising or charity groups find that these scams can be as costly to their reputations as to their finances." As part of the Coupon Information Center's interest in educating consumers about the legitimate use and redemption of coupons, CIC now has a website dedicated to fighting coupon fraud that consumers can visit at: http://www.cents-off.com

Although fraudulent promoters promise hundreds of dollars or more per week in earnings from coupon-related business opportunities, the FTC says there is only one legitimate way to use a coupon -- clip it out and use it to save money on the purchase of the designated product. According to the FTC brochure, "Costly Coupon Scams," selling or transferring coupons to a third party violates most manufacturers' coupon redemption policies, and usually voids the coupon. Moreover, the brochure warns, consumers who buy coupon certificate booklets have to complete and mail a form, select 30 to 50 products from a list, and include a self-addressed, stamped envelope and processing fee in order to redeem the certificates. They end up paying substantial processing fees for coupons that they could clip for themselves out of newspapers and magazines. Promoters of these coupon booklet business opportunities also claim that the coupons have no expiration date, but the FTC says that's true for only a tiny share of manufacturer-issued coupons.

The FTC brochure suggests that consumers tempted to buy into a coupon clipping venture should look for:

• guarantees of big profits, high income or amazing savings in a short time;
• claims that no risk is involved;
• lots of pressure to act now; and
• claims that this is a hot, "can't miss" opportunity.

If still tempted to buy into a coupon clipping venture, the brochure urges that consumers exercise caution, ask questions and make sure that the answers add up.

The brochure also suggests that consumers victimized by fraudulent coupon clipping schemes complain to the local Postmaster, their state Attorney General's office, and the FTC's Consumer Response Center at 202-FTC-HELP.

Copies of the brochure and news releases regarding other FTC surf days are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.