“There is a dark-web or dark-side coupon group that is doing nothing but selling coupons that are fraudulently and sophistically made to resemble actual coupons by the manufacturers,” Sheriff’s Capt. Tim Holifield said.
The FBI has cracked down on counterfeit coupons in recent years. In April, a Virginia couple pleaded guilty to fraud charges in a scheme in which they stole $31 million from businesses. Last August, a grand jury charged 12 people in California in connection with a scheme to steal millions of dollars’ worth of electronics with fraudulent discounts. Both cases are ongoing.
The investigation in Montgomery County began last November, police said, when Walgreens contacted law enforcement and informed them of the fake coupons. Investigators then learned that many other major retailers, including Target, H-E-B, Kroger and Walmart, were also noticing an uptick in fraudulent discounts.
Investigators soon found a website where customers could order counterfeit coupons that appear to be directly from manufacturers. They then identified a “printing house,” which Holifield described as a coupon-printing “sweatshop.” The printers were allegedly identical to those used by retail stores to print coupons.
“They had a number of computers lined up and printers, and they were just going through the ink and tape — just continuing to mass-produce these coupons,” Holifield said.
One suspect managed to buy $200,000 worth of items in one year using the fake coupons, according to law enforcement.
Police secured search warrants after identifying possible conspirators thanks to online marketplaces such as Facebook and Craigslist.
“When you go to social media … you may see someone selling laundry detergent,” Holifield said. “ … Many times these are people who have acquired them through fraud — not all — but certainly that’s probably one of their marketing attempts.”
Police raided four printing locations, filling a truck with 4,000 items worth $40,000. Authorities told Patch.com that stores lost almost $10 million in connection with the scheme and that they expect to uncover another $10 million as the investigation continues.
With the FBI’s involvement, the suspects will likely face state and federal charges, Holifield said.
Normally, the seized items would be kept in evidence. But Holifield announced on Tuesday that a judge allowed the sheriff’s office to distribute the items to six local charities.
“The sheriff’s department is taking a bad situation from crime and turning it into a beautiful mission to provide for families that are less fortunate — everyday items that we can use to support our families,” Marilyn Kasmiersky, executive director of the charity Family Promise, told KPRC.