Quad-City Times from Davenport, Iowa • 13

(HmDItD the Tames 3' QUAD-CITY TIMES Thursday, July 10, 1980 i Roland P. Dreier, director of coupon control at Nielsen Clearing House, displays some of the evidence gathered In the Clinton-based company's fight against misredemption of coupons. (Times photos) C' i 7 M. Clinton clearinghouse, 1 WW -4 the largest coupon redemption center in the nation, says it saves manufacturers an estimated $18 million a year by ca tching fraudulent coupons. By Linda Dougal of the Times 7 yC T1 I 'I hh, I Nielsen workers who process and count coupons.

Industry estimates indicate that 10 to 20 percent of all coupons turned in are redeemed fraudulently, according to Dreier, director of coupon control. It could be the friendly checkout clerk who lets a faithful customer slip in a few coupons for products not purchased. "You're talking ones and twos there" Dreier said. "The real problem is when the coupons come in the back door and go out the back door to the manufacturer." IDENTIFYING fraudulent retailers, keeping the manufacturers from having to pay for falsely redeemed coupons and helping to prosecute offenders is the responsibility of Dreier and Drapeau and their crew of 35 women in the coupon control division at Nielsen, the nation's largest coupon redemption center. Nielsen claims its efforts have reduced the misredemption figure for their manufacturers from the 10 to 20 percent industry-wide estimate to below 10 percent.

The yearly total saved for manufacturers is placed at $18 million. As clearing house for about 500 manufacturers, Nielsen receives coupons from more than 152,000 retailers and sorts them for redemption in an operation that employs 550 workers. Key to the fraud battle is a computer containing details about each retailer and the number of coupons turned in. By comparing rates and indexes of redemption, the computer can identify areas of the nation and even specific retailers turning in a higher-than-normal number of coupons. "We then try to determine why they redeem higher," Drapeau, Niel-' sen's fraud investigation coordinator, said.

One legitimate answer is that the retailer has expanded his store. More often, the retailer is "salting" his coupon loads with extras. For example, a computer printout on one retailer -under investigation showed a jump from 636 coupons in 1978 to a whopping 86,665 in 1979. THE EXTRA coupons come from "various and sundry sources," Dreier said. "I don't know where it starts sometimes, but the retailer has to be the fence." If an investigation yields no plausible explanation for the increase, the retailer is put on a suspension list.

Most of the manufacturers tell Nielsen to automatically cancel payments to retailers on the list. "We had two cases in the last 2' years where we were wrong on someone on our list," Dreier said. Between 35,000 and 40,000 retailers are on suspension "for one thing or another." Another ploy is to set up a non-existent "store" and begin redeeming Coupons. "No-store" accounts are detected in the coupon fraud investigators' regular verification process. Each retailer submitting coupons is checked out by the crew of inspectors, who use telephone checks and other public resources to make sure the store is really a store.

If necessary, an independent agency is sent to do an on-site inspection. "THROUGH the years we have identified more than 10,000 of these phony Dreier said. In May, there were 2,117 active "no-stores" still sending in coupons to Nielsen. "They're not getting any money. We just throw away the coupons," he said.

The other 8,000 have "dried up," Dreier explained. "They'll only submit as long as they receive." Many of the identified "no-stores" send in just small numbers of coupons. "They're testing, they think maybe they'll get paid. Not in Clinton, Iowa," Dreier said. He cites the example of a man who set up 14 phony stores and began, sending coupons.

Through a routine check, the non-existent stores were detected seven years ago and Nielsen stopped payments. However, it took authorities five more years to pin down the culprit. In the meantime, he was taking in several hundred thousand dollars a month from other CLINTON, Iowa The blue and yellow coupon appearing in a Sunday edition of the New York Daily News of fered a refund on a box of "new" Breen detergent. It looked like a fake and it was. No one would ever find the product on 1 a supermarket shelf; the coupon could never be legitimately redeemed.

Yet more than 2,000 retailers in New ork and New Jersey tried to get paid for thousands of Breen coupons. The bogus coupon was a ploy by U.S. postal inspectors in cooperation with the Clinton-based Nielsen Clearing House coupon sorting agency to track down merchants ho were illegally putting extra coupons in their redemption loads. The result: the 300 "worst cases" were presented to area district attorneys and, to dale, 180 convictions have resulted. 1 During their association with Nielsen's coupon control division, Roland P.

Dreier and Richard Drapeau have seen every trick tn the book when it domes to coupon fraud, the multi-million dollar nemesis of the coupon in-' duslry. 1 There was the West coast operator who hired people to walk over coupons on a carpet to wrinkle them before sending them in for redemption from a phony store. And the unsuspecting college fraternities and community groups who gather unused coupons for a gamut of "tear-jerking causes" when the real cause is false redemption by a slick con artist. SOME CROOKS throw coupons in a ciothes dryer to make them look Worn, while others attempting to defraud manufacturers don't even bother trying to make the coupons look used. Many of the scams required highly sophisticated detection tools.

Others, like "gang cut" coupons stacks that are clipped by the same person and Jounlerfeit coupons, can be spotted by If I Ocean I STORECOUPON Here's the bogus coupon, used as a ploy by the U.S. postal inspector in cooperation with the Clinton firm redemption centers. A simple method sometimes used by postal authorities is to circulate a fake coupon for a non-existent product, like the Breen detergent trap. THE WORST offenders are small, individually owned stores. Large supermarket and retail chains are hardly ever involved, Dreier said.

Most problems crop up in the East, but there currently are several "hot spots" for coupon fraud in the country, and crackdowns are underway in several major cities. Nielsen's coupon control division cooperates closely with several investigatory agencies to prosecute offenders, and that's where Drapeau and his stacks of statistics fit in. He is in daily contact with authorities from the U.S. Postal Service, FBI and Internal Revenue Service working on coupon fraud cases. Nielsen often provides the bulk of the evidence in court proceedings dealing with coupon fraud.

The postal authorities are the primary enforcement agency involved in catching coupon fraud because it goes through the mail system. Under the mail fraud statute, the maximum penalty for a first conviction is up to $1,000 and five years in jail. Waiting in the wings is.the IRS, which can pursue unreported income from coupon misredemption. Charges of income tax evasion or grand larceny can be filed by the FBI. Since 1977, when Nielsen organized coupon control into a separate division, there have been 140 court cases Involving more than 2,000 stores.

DREIER said the conviction rate In postal fraud is nearly 100 percent, and a majority of the offenders plead guilty when confronted with the evidence. Although a relatively small percentage of the cases are solid enough to get a conviction, the fraud in- vest igators believe it's enough to help. "It's acting as a tremendous deterrent for future attempts," Drier said. Coupon fraud emerged as a problem in the mid-1960s and has been stubbornly prese'nt since then. With couponing on the increase by inflation-fighting shoppers and buyer-hungry manufacturers, a similar jump might be expected in coupon misredemption.

Not so, say the coupon control experts. "I see misredemption on the decline," Dreier said, crediting publicity about the cases where culprits are caught and a massive industry sroRt coupon 74 NMRN -i vi C3 i -w- cy. I zz." 74 On two 46-oz, cans of I HAWAIIAN PUN( 1 1-uiv flavors. 1 STOBK COUPON i rf-A wk 1 1J rz k'-w r'. 1 i lr, 'St When buy you rOeiiou; A Staff of 35 workers In the coupon control division of the Clinton company examines coupons submitted for redemption by retailers..