Last year, I shared the story of “Purple Lotus,” a man who ran a massive coupon counterfeiting scheme on the Dark Web. (Wired has an excellent article detailing his crimes.) Today, the man behind the Purple Lotus moniker, Beau Wattigny, was sentenced to 41 months in jail and ordered to pay $74,855 in restitution, the amount he earned selling his counterfeit free-product and high-value fake coupons.
I’ve followed this story with interest since it broke, particularly because I was hoping the court would consider the massive losses brands suffer when a prolific coupon counterfeiter introduces thousands of legitimate-looking counterfeits into the marketplace. The counterfeit coupons Purple Lotus produced caused upwards of a million dollars’ worth of losses to brands when consumers successfully redeemed those coupons for free products, yet he’s only forced to pay back what he earned selling the counterfeit coupons — not further cover the losses to the brands.
In 2012, another high-profile counterfeit coupon ring was busted, and the ringleader was sentenced to two years in jail and ordered to pay $5 million in restitution. She earned more than $2 million. In that case, authorities seized more than $40 million worth of counterfeit coupons. How many millions of dollars’ worth of losses did she incur to the brands during her years of operation? It’s likely those losses tipped the scales at tens of millions of of dollars.
Another coupon counterfeiter, “Coupon Guy” Lucas Henderson authored an ebook called “How to Make Coupons.” His book detailed all of the steps needed to create a valid, working counterfeit coupon. Henderson’s instruction manual inspired countless people to create and flood the marketplace with fake coupons. His sentence included three years of supervision and paying $900,000 in restitution, even though the losses incurred by brands were much larger. (Procter & Gamble lost more than $200,000 on counterfeit Tide coupons — just one brand affected — which were created with Henderson’s methods.)
Coupons in the News has an excellent article about today’s Purple Lotus hearing:
Using the name PurpleLotus… Wattigney used custom-built software to create and sell thousands of coupons that both looked and functioned like real printable coupons from sites like Coupons.com, SmartSource, RedPlum and Hopster. “These are designed to take advantage of a flaw in the Walmart self checkout system,” PurpleLotus wrote in one Silk Road posting. “But let’s be clear, these will also work anywhere! Live cashiers are often more gullible than you think.”
PurpleLotus specialized in creating coupons for gift cards – $20 off a Best Buy or Barnes & Noble gift card, for example, or even $49.99 off a $50 Visa gift card. The coupons would actually scan and be accepted at store registers, just as a real $49.99 gift card coupon would – if such a thing actually existed.
PurpleLotus also sold a selection of too-good-to-be-true grocery coupons – everything from $3.40 off a box of Band-Aids, to $11.99 off a pack of Energizer batteries. And if you didn’t see something you liked, you could buy access to the coupon generator itself – “so easy your grandma could make 10 coupons in 15 minutes!” PurpleLotus promised.
This went on for at least two and a half years, before PurpleLotus “retired” in 2014, as investigators closed in. And last year, they got their man…
Amora says
Soooo how do you know if a coupon is genuine before yiu use it?
Coupon Maven says
You need to consider the source. Coupons available in the newspaper, printables directly from trusted sites (Coupons.com and that caliber) are legitimate. Coupons obtained directly from brands are legitimate (a brand mails it to you, or you request it from a Facebook page, etc.)
If you’re buying coupons online, chances are high that they’re counterfeit, especially if they are very high-value or for free products.