in LPRC Reports

Coupon Fraud Report  Johns Hayes Scicchitano 2009

Introduction
This research project was designed by the Loss Prevention Research Council (LPRC) to better understand problems that retailers face from fraudulent coupon use in their stores.
The Coupon Information Center (www.centsoff.com) estimates that coupon misredemption costs consumer product manufacturers hundreds of millions of dollars every year. Estimates of this cost vary from a low of about $300 million annually to more than twice that amount. They also note that coupon misredemption increases costs for consumers, because the costs of misredemption often must be reflected in consumer prices. The impacts of coupon fraud for retailers, however, are less clear.
In addition, the continued increase of on-line coupon web sites and printable internet coupons, coupled with the recent economic downturn, may be compounding the issues retailers and manufacturers face from coupon fraud.
Thus, this exploratory research project was developed to seek information from retailers across the country about their companies’ policies and practices regarding coupons; the impact of fraudulent coupons for their stores; and, current and future practices for reducing losses from coupon fraud. Surveys were completed with senior personnel from 20 major U.S. retailers across four retailing categories: Big Box (including Big Box, Discount, and Home Improvement), Specialty (including Pets and Toys), Drug Stores, and Super Markets.
The results of these surveys, presented in detail below, provide a foundation for better understanding the issues retailers face with coupon redemption and misredemption, as well as future collaborative efforts between retailers and manufacturers to reduce losses from coupon fraud.