Couponing Ethics: Is it wrong to buy and sell coupons?

This is the third in a series of articles exploring couponing ethics.
You may also enjoy the previous articles in this series:
Couponing Ethics: Reader made countless photocopies of coupons
Couponing Ethics: Blogger advocates coupon misuse for deeper discounts

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Among coupon enthusiasts, there is perhaps no more controversial topic than that of the resale of coupons. While it may seem illogical to pay for coupons, for some shoppers, the temptation to buy larger quantities of identical coupons is great. And, it’s also pretty easy to buy coupons on the Internet. There are quite a few coupon clipping services online where shoppers can buy coupons, and popular auction sites often have a plethora of coupon listings too.

With all of these coupons “for sale,” it must be okay to buy and sell coupons, right? Even though there are many places selling coupons online, in most cases it is not okay to sell them. And, I completely understand that this may be confusing to new coupon users. Years ago, when I first began couponing at a more-enthusiastic level, I saw numerous clipping services online and assumed that because they were there, the services were legitimate and legal. (As an aside, I have not purchased coupons from a clipping service or an auction site.)

But, as I became more educated about the legal terms and ramifications of buying and selling coupons, I understood that in most cases, coupons should not be bought or sold. Let’s take a look at the fine print of some manufacturer coupons:

• Coupons may not be combined, sold, auctioned, or otherwise transferred or reproduced.
• Void if transferred, sold, auctioned, reproduced or altered from original. Any other use constitutes fraud.
• Coupon cannot be bought, transferred or sold.

An argument I often hear is, “I bought the newspaper or printed the coupon. It’s mine, and I can do whatever I want with it.” The websites of many clipping services often state that you’re not actually paying for coupons, but rather, “you’re paying for our time to clip them.” (If that is true, why does a $5 coupon cost more than a .50 coupon? Does it really take longer to cut a higher-dollar-value coupon out?)

Unfortunately, neither argument can be true.

It’s important to think of a coupon as a contract between you, the manufacturer and the store. While you may own the actual piece of paper that you cut out of the newspaper inserts or print online, you do not own the contract itself. If at any point any of the terms of this coupon’s contract are violated, the coupon is considered to be void, and the manufacturer does not have to pay out the reimbursement for that coupon.

How does the manufacturer know if a coupon has been sold? There is no single, definitive way to know. So, coupon redemption houses and clearinghouses utilize a variety of indicators to identify whether a coupon may have been sold at some point. If the manufacturer believes a coupon may have been sold, the coupon is void, and they do not have to reimburse the store for it. One method of identifying possibly-sold coupons is via the coupon’s condition. The term “gang-cutting” refers to the practice of stacking multiple, like insert pages on top of one another, then cutting through the entire stack at the same time, either with a scissors or with a paper cutter. This is the method most often used to cut individual coupons by resellers. Gang-cut coupons are also often in mint condition, meaning that they haven’t been held or handled enough to indicate that they were hand-cut by consumers.

Look at the terms on this coupon:

• Void if… coupon is reproduced, gang cut or mint condition.

Whether you like it or not, or wish to continue arguing “a coupon it’s mine, I can do what I want with it,” the truth is that the manufacturer ultimately holds all of the cards in this particular game. Again, you own the paper it’s on — not the actual exchange of money that it represents. Even if your store accepts coupons that you purchased, which were gang-cut by a reseller, the manufacturer may refuse to reimburse your store. Then, your store is forced to take a financial loss. If you wouldn’t shoplift from your store, you shouldn’t pass coupons that they will not be reimbursed for either. Some stores have added clauses to their coupon policies that they will not accept any coupons that appear to be gang-cut either, because again — as far as the manufacturer is concerned, those coupons are void. (Learn more about the gang-cutting of coupons at this link.)

Another argument I often hear is “the manufacturer prints all of these coupons, why do they care how many we use?” I’ve previously written another post on this topic, but in brief, it is important to understand that a manufacturer budgets for a free-standing insert coupon campaign fully expecting only a small percentage of those insert coupons to be redeemed. With the average coupon redemption typically running at less than 6%, it means that statistically speaking, 94% of the coupons a company issues for a particular campaign will not be redeemed. But, it also means that when a company runs a coupon campaign, their expected payout for the coupons redeemed during that promotion will also likely fall into that same low, expected range of return.

Of course, the company wants as many people to buy its product as possible, but there’s a newer element in the mix that companies have had to contend with – the extreme couponer. When a extreme couponer orders large numbers of coupons online, an “artificial demand” is created for that product. The same shopper that might buy one, two, four or five of a product might now be buying 20, 30, 50 or more of them. And while the shopper certainly can buy however many the store will allow them to, like it or not, a manufacturer isn’t too thrilled about the same person redeeming that many coupons for the same item. They want us to buy their products, but when the quantities move into the extreme range, they also know that person is purchasing far more than he or she would normally buy if coupons weren’t a factor.

Manufacturers are reacting. Any regular coupon shopper has noticed that for many coupons, the statement “Limit 4 Like Coupons Per Transaction” appears, the expiration dates are getting shorter, and in some cases, dollar values are going down too. Why? According to some of the manufacturers I spoke with at an industry conference last year, the shortened dates and lowered values are being used to combat the resale of coupons. With shortened dates, the window of time that those coupons can end up on the resale market is shortened as well. Another manufacturer’s representative was even more candid. The rep said “If we see too many of our coupons on Ebay, we know the dollar value was too high, and the value of the coupons we issue goes down next month.” (Learn more about manufacturers’ reactions to resale and over-redemption at this link.)

Another significant reason not to buy coupons online is coupon fraud. The number of completely-free product coupons being “sold” online is surprisingly widespread. Again, the fact that they’re being sold would void most of these coupons if they were legitimate in the first place… but many of them aren’t. If you look, you can find numerous coupons that are already on the CIC’s fraud list being sold online, seemingly “legitimate.” And, when people buy coupons and get an envelope full of color photocopies, or worse, professionally-printed, realistic-looking counterfeits, is their inclination going to be, “Well, I shouldn’t use these because they don’t quite look real?” It’s more probable that they’ll think “I paid for these, I’m going to use them!” If you don’t purchase coupons in the first place, you nearly eliminate the risk of passing counterfeit coupons — as well as the risk of being prosecuted for passing counterfeit coupons.

The simplest reason not to buy or sell coupons, though, is because the coupons themselves state not to do it. If the ethics of what we do are important to you, following the rules that the manufacturers have set is the best and most ethical way to enjoy the savings that coupons can provide to us.

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If selling coupons is wrong, why does Ebay and other sites allow it? Why don’t the manufacturers do anything?

Indeed, some coupons don’t contain a “Void if Sold” clause, though most do. But if you look at the image above, you’ll see that this particular coupon does not contain this clause. Technically, if the coupon does not state that it can’t be sold or auctioned, there would likely be no penalties for doing so.

Ebay has a special policy specifically for coupon resale in which they state that sellers should review coupon terms to make sure the coupon can be sold… and then they go on to say that they don’t usually remove coupon listings anyway. They also warn that stores may not accept coupons that they believe have been sold:

Make sure you review the terms printed on the coupon before you sell it. The terms on some coupons state that selling them is restricted or not allowed. While we don’t monitor the site for possible violations, and we usually don’t remove listings based on third-party contracts, we ask that you carefully review the coupon’s terms and conditions when you’re deciding if you want to list it.

Also, sellers can’t claim that the price of the coupon is based on the value of the labor involved in clipping the coupons instead of the coupons themselves. Under eBay rules, the coupons themselves are the items being sold.

Coupon buyers should also note that retailers might refuse to accept coupons that have been obtained in a way that violates the terms on the coupon.

Ebay seems more concerned with collecting fees than stopping coupon fraud, and they’re placing the responsibility to sell valid coupons back onto the sellers. Even when counterfeit coupons appear on Ebay, they often allow the auctions to continue. Check out this news report about people who bought fake coupons online and how angry they were that they were out significant sums of money… that they paid for useless pieces of paper. Even after this report aired, the same counterfeit coupons were still available to purchase on Ebay. And if you bought them, Ebay and Paypal would do nothing, allowing the sellers to keep the money paid — even when the people that received counterfeit coupons filed disputes. As far as Ebay seems to be concerned, you paid for a piece of paper, and you got one.

I’ve received many emails over the years from shoppers who state something like “Because Ebay allows you to buy coupons, I thought it was okay. Why don’t the manufacturers or the CIC do anything?” While the CIC is the industry’s watchdog group and maintains a regularly-updated list of counterfeit coupons that are circulating, it primarily represents the companies and manufacturers that are members of its organization. The CIC is constantly monitoring and releasing alerts on fraudulent coupons that are circulating, But, if a manufacturer chooses not to be represented by the CIC, that manufacturer is left to monitor and prosecute coupon fraud on their own — or not.