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The Rise of Coupon Scams Online

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When Sylvia Turner saw a Facebook friend's status boast that he had received a free iPad and she could too, she couldn't resist clicking on the link in hopes of receiving the gadget she coveted most. Assuming the website needed her address and phone number to ship the item, she gladly provided her personal information. For the next several weeks she was bombarded with calls from telemarketers and she had to opt out each time a new one rang. What she and others who are seduced by these false ads eventually learn is the so-called gratis Apple device is in fact an online coupon scam.

"I can't believe I fell for that," said Turner, a college graduate professional who often shops online.

Although Turner provided her email address, mailing address and telephone number she says she never fulfilled the eligibility requirements of purchasing products over a period of time that would have allowed her to receive the "free" iPad. When she realized the price was too steep she tried to navigate away from the website and was greeted with a pop-up box offering her $1,000 worth of brand-name grocery coupons for completing a survey. That's when she knew she was a victim of an online scam.

"If it's sounds too good to be true, it probably is," says Kevin Strawbridge, President of DealTaker.com, a free coupon site designed for members to share and take deals on merchandise and services including food, travel, electronics, home furnishings, jewelry and pet supplies, among others.

"What's more prevalent now is the advertisement to get something for very cheap but what people are trying to do is get information. They say they're giving away an iPad and you have to click on all of these links. Nine times out of 10 you never get to the end of what you're supposed to do to get the free thing."

An estimated 63% of shoppers search for online coupons or deals when they purchase something on the internet, according to a poll conducted by Ipsos Public Affairs on behalf of Offers.com, which launched in February 2009 and helps consumers find the best offers from more than 3,000 online stores and companies. In the last year there was a more than 50% increase in the number of stores and companies with offers on the site.

"In the last two or three years, using online coupons has become more much prevalent," Strawbridge says. "There is probably 20 to 30% more usage than there was two or three years ago. It's hip and trendy to talk about ways to save money, where that wasn't really the case a few years ago."

Being frugal turned fashionable in 2008 when the economic downturn began. As the nation's economic recovery creeps along at a snail's pace, a significant amount of Americans continue to rely on online coupons for purchases ranging from groceries and clothes to big-ticket items like major appliances and vacations. Coupons don't necessarily equate to wealth. Even chic fashion houses offer promo codes.

"I expect there to be a coupon for everything," Strawbridge says.

More than 3,000 manufacturers distribute nearly 330 billion coupons -- worth an estimated $280 billion -- every year in an effort to help consumers save money and advertise their brand. Coupons.com data shows that digital coupons are outpacing coupons in free standing inserts 10 to 1 and around 46 million Americans, representing 20.8% of the U.S. population, use online coupons. Every day consumers awake to an Inbox full of emails offering discounts on spa treatments, entertainment, dining and nearly everything else.

Overall, more than a billion dollars are saved with coupons annually by smart consumers, according to Coupon Information Corporation.

Conversely, coupon fraud costs consumer product manufacturers hundreds of millions of dollars every year, says the CIC. It's not a victimless crime like some think because it drives up the costs of goods for everyone.

Turner, on the hunt for a "free" iPad clicked on a "phishing" site, which can result in consumers receiving a ton of email spam and possibly have to deal with identify theft. Phishing sites are also part of the popular "bait and switch" scam. This happens when consumers are offered an online coupon code and once they agree, are asked to provide personal information, including credit-card details, passwords and other financial data.

Another common online coupon scam involves fake coupons. Counterfeit coupons have been around for years but they are more widely circulated now because of improved technology and computer scanners and graphic design programs being common in households. Technology, in particular email and online auction sites, make distributing them easier than ever. It's against the law to use bogus coupons and ignorance is not a legitimate excuse.

"The biggest scam is people just put up fake coupons," said Offers.com Founder and CEO Steve Schaffer. "It's just a big waste of time for consumers. We tell consumers, 'Find a website you like, like offers.com, and go there often. Don't waste your time trying a hundred different sites to save a nickel.' "

With "deal" being a buzz word today, being coupon-savvy is of utmost importance. Here are a few tips to best avoid online coupon scams:

  • Use reputable/authorized coupon distributor sites like DealTaker.com, Offers.com and Coupons.com by verifying the site's Better Business Bureau accreditation. Avoid sites not known to offer manufacturer coupons.
  • Never pay money for coupons or discounts. Legitimate sites like the aforementioned ones are free. Also, the sale or transfer of coupons violates most manufacturers' redemption policies.
  • Be wary of high percentage off and free product coupons. Manufacturers generally only offer these through mail-in rebates and customer service departments, as well as authorized online coupon distributors.
  • Be suspicious of sites that require you to provide personal or financial information to redeem a coupon aside from the normal checkout process during a purchase.
  • Look for specific features on the coupons such as expiration dates, any restrictions on the use of the coupon, legal disclaimers about replicating, selling or transferring coupons, and the option to comment on or report non-working coupons. Coupons lacking this information may be altered copies of old, expired coupons.

If you come across an online coupon scam you should report it to the merchant as well as the Attorney General's Office in your state or the state where the company is located and the FTC. To file a complaint or get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. Also contact CIC, which is dedicated to educating consumers about the facts on coupon fraud while helping them combat it, at www.cents-off.com/.

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