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Internet Coupons Fraud

Aug 17, 2007
It seems a logical next step for food manufacturers to spread their coupon distribution policy to the Internet in their everlasting attempt to lure customers into trying their products. However, strangely enough, this is the one area of Internet coupons that has not taken off.

In the first analysis, it is estimated that a small proportion of the coupons issued, including those printed and distributed in the Sunday newspaper, are really used, resulting in an enormous waste to the retailer. Doesn't that make coupons a natural for the Internet and environmentally friendly too? Not necessarily.

Initially, offering manufactures' food coupons over the Internet, even sending them directly to users email in boxes, seemed a good idea. Not only could coupons be printed only as needed, thus saving manufacturers printing and mailing costs, but also, the Internet targeted a more affluent segment of the population. It was reasoned that computer use and computer and printer ownership rested in a group of people that had a bit more money, education and general savvy. Herein may be the problem.

Manufacturers began to realize a new phenomenon, coupon fraud. This problem did not arise from customers printing out multiple coupons of, for example, 50 cents off a popular shampoo and buying quantities of it. Of course people did this too, but the real problem came when the savvy computer user altered this coupon to allow one dollar off and then printed it in bulk. The retailers and manufacturers took big losses from this type of coupon fraud and began limiting or ending their involvement with Internet coupons. By the end of 1994, interest in pursuing the area of Internet coupons for groceries was nearly at a standstill. It was thought that print at home coupons for groceries offered on the internet, while seemingly a good idea, was too insecure for the huge distribution that was offered by the Internet. Furthermore, the security involved and the risks out weighed the potential advantage Internet coupons offered as an advertising and marketing tool.

Today, however, manufacturers and merchants seem willing to revisit the concept of offering printable coupons on the internet, since consumer interest is still there and growing.

Better security is the key to this turnaround. Manufacturers are hoping that better distribution policies that target legitimate customers will make coupons less accessible to all users. Manufacturers are offering coupons to consumers who registrar on a merchants website or in a shopping club website, rather than bulk e-mails. Also, better software security has been put in place by the manufacturer to prevent the alteration of coupons before printing. And security is now available to the retailer to detect fraudulent coupons.

These security efforts are being made to fight against fraud to allow Internet coupons to safely be distributed in the future. It is advantageous to the consumer and to the companies to offer more target based coupons based on the customers needs. The good news to consumers is that as more solutions are found to eliminate coupon fraud, more coupons are returning to the Internet.
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