December 4, 2003, 12:00 AM

Trade group seeks solutions at point of sale to fight Internet coupon fraud

If online security fails, cashiers are a last line of defense against fraudulent home-printed Internet coupons, but verification can’t encumber check-out. One CPG manufacturer says fraudulent coupons have cost it $1 million this year.

In the quest for new customers, online marketers have been using printable discount coupons as a means of attracting new shoppers. But while the Internet has created a new channel for coupon distribution, it’s also created a new avenue of coupon fraud. So the Coupon Information Center, a manufacturer-funded group that monitors coupon fraud, is now seeking suggestions on technical solutions to identify fraudulent Internet-printed coupons at the point of sale in stores, says the organization`s executive director Bud Miller.

Despite increasing measures taken by the providers of online coupons for store redemption, sometimes sales associates or cashiers are the last line of defense, which puts an extra burden on store staff. Though a new technology called Veri-FI allows cashiers to key in code numbers on coupons to check validity, some stores have said the process would encumber check-out. Coupon providers are working on the next generation of security measures; provider CoolSavings Inc., for example, says it will roll out three new initiatives next year.

Miller says Coupon Information Corp. over the past several months has obtained copies of about 50 counterfeit coupons – with altered expiration dates or codes, for example -- from various Internet outlets. The group is now forwarding the counterfeit coupons to the manufacturers involved to enlist their cooperation in developing an estimate of the cost of fraudulent home-printed Internet coupons to business. One CPG manufacturer has already told CCI that the cost of fraud from home-printed Internet coupons during that past several months has been about $1 million, Miller says.


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