Big Firms Sue Coupon Clearinghouse
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Saturday, October 6, 2007
MILWAUKEE, Oct. 5 -- More than 20 consumer-product companies, including PepsiCo and General Mills, sued the nation's largest coupon handler, saying they lost at least $150 million in a coupon fraud.
The lawsuit against International Outsourcing Services and several of its former officers was filed in U.S. District Court for the Eastern District of Wisconsin. IOS and several of its officers were indicted on fraud charges in that court in March. The company was accused of defrauding stores and manufacturers of at least $250 million over 10 years by submitting fake coupons to manufacturers for payment.
Criminal charges against the company were dropped in May after company officials agreed to help prosecute 11 individuals charged, including nine IOS officers and two executives of Riya Coupon Services of New Jersey.
The lawsuit says IOS and the officers submitted fraudulent invoices for coupons that were never redeemed and received payments for them.
IOS is a clearinghouse for coupons, receiving them from retailers who seek payment from manufacturers. IOS processes the coupons, gets payments from manufacturers and gives them back to retailers after subtracting fees for its services.
Other plaintiffs include Johnson & Johnson, Kraft Foods Global, Kellogg, Bristol-Meyers Squibb, Energizer Battery, J.M. Smucker Co., Kellogg, McCormick & Co., and S.C. Johnson & Son.
A message left for IOS chief executive Greg Rayburn was not returned Friday.
A letter posted on the company's Web site noted that, as of March 23, several of the officers named in the criminal case were no longer with the company.
