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Bogus bargains

Supermarkets tighten coupon policies after wave of counterfeits

Counterfeit coupons are such a fast-growing, multimillion-dollar problem nationally that several New England supermarkets have instituted new redemption policies to keep their losses to a minimum.

Shaw's Supermarkets, Hannaford Brothers, and Price Chopper have stopped accepting manufacturers' coupons that appear to be computer generated and offer free products, discounts greater than $5, or have bar codes that don't scan properly.

Officials at all three chains said losses have been minimal, but they decided to impose the restrictions because they didn't want to take any chances.

"In a relatively short time frame, the problem has reached epidemic proportions," said Caren Epstein, a spokeswoman for Hannaford, which is based in Scarborough, Maine.

"We wanted to nip this in the bud right away," added Terry Donilon, a spokesman for West Bridgewater-based Shaw's.

Most other area chains haven't changed their coupon acceptance policies yet. A spokeswoman for Quincy-based Stop & Shop Supermarkets, the region's largest chain, said officials are aware of the fraud problem and monitoring the situation closely.

"If we need to, we'll make changes as necessary," said Faith Weiner.

Coupon fraud has long been a problem in the supermarket industry, where coupons are a huge business. According to the Promotion Marketing Association, 333 billion coupons were issued last year and nearly 4 billion of them were redeemed, saving consumers an estimated $3 billion.

But supermarket chains and manufacturers began to worry late this summer when consumers deluged supermarkets in the South and Midwest with coupons for free pints of Haagen-Dazs ice cream and up to $11.99 worth of Stouffer's frozen dinners.

Manufacturers bounced the bogus coupons back to the supermarkets and many of the chains, including Kroger and Publix, reacted by refusing to accept any computer-generated or downloaded coupons.

Heather Harde, senior vice president for business strategies and development at News America Marketing who oversees the company's Smartsource.com Internet coupon subsidiary, said the counterfeit coupon problem turned out to have little to do with the Internet.

She said 80 percent of the fraud arose from three coupons issued by Haagen-Dazs, Stouffer's, and Pepsi. She said the coupons were mailed to individuals as a courtesy by company customer service representatives and ended up being copied and then widely circulated.

As supermarket chains have realized the problem wasn't caused by coupons downloaded from the Internet, she said they have revised their redemption policies.

"We're starting to see retail-

ers re-emerge accepting Internet coupons with some caveats," she said. Harde said Internet coupon sites like Smartsource.com are secure. She said consumers are only allowed to print coupons and cannot download them and retain them electronically. She also said the company's sophisticated bar code technology can trace a coupon back to the printer that printed it.

But Bud Miller, executive director of the Coupon Information Center in Alexandria, Va., which works with law enforcement agencies to fight coupon crime, said the counterfeiting problem hasn't been confined to coupons sent by mail. He said he has obtained counterfeits of coupons downloaded from Internet sites as well as newspaper insert and restaurant coupons.

Miller said he is surveying manufacturers to determine the scope of the problem. He said many supermarket chains have incurred losses after redeeming bogus coupons, but many manufacturers also have suffered. He said one manufacturer, who he declined to name, has eaten $1.1 million in losses from a single counterfeit coupon. The Food Marketing Institute and the Grocery Manufacturers Association estimate coupon fraud is costing $500 million to $800 million annually.

The Internet and new copying technologies have made it easier to make and distribute counterfeit coupons that are difficult to detect.

The two groups have criticized eBay for auctioning coupons on

its website. Most manufacturer coupons carry disclaimers prohibiting their transfer, but those selling coupons on the Internet sidestep that prohibition by saying they are charging for their time and expenses in assembling the coupons and not the coupons themselves.Bruce Mohl can be reached at mohl@globe.com.

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