While this system sounds ideal when the concept of how it is supposed to work is explained, reality is quite a different matter. Here is the basic set up the coupon certificate programs, how they are sold as working and how they work in reality:
Promoter: The promoter, usually the owner of the company, recruits sales people by charging a “distributor fee” for the business opportunity of selling coupon certificate booklets. The investor (i.e. sales person) is told he/she can sell the booklets to consumers for $15 to $50 each. The booklets contain 20 to 50 certificates with each certificate having a redemption value for $10 worth of grocery coupons. If the math alone is considered, it looks like a great deal. Each booklet has a coupon value of between $150 and $500 so selling them for $15 to $50 should be easy. The investor can make a big profit selling the booklets to consumers and the consumers can save big money by using the coupons when they buy the groceries. It appears to be a win – win – win situation for everyone involved. The reality is, however, that only the promoter will make money.
Investors: These are the people who spend several hundred to several thousand dollars to buy the certificate booklet distributorship. They end up losing money because the large earnings the promoter claims they can make are never realized. The main problem is that the consumers realize that the coupon books are not the value that is claimed and thus there is no repeat business making continued sales difficult.
Consumers: These are the people who purchase the coupon books expecting large savings on their groceries. There are several issues that keep them from getting the savings they thought they would receive.
1) To redeem the certificates, you have to list a minimum number of items, so you wind up with a lot of coupons for items you rarely use.
2) You are usually required to send in a “processing fee” of $1.00 or more with each coupon redeemed which cuts more into the savings
3) You are usually required to send a self addressed stamped envelope with each order meaning stamps and cost of the envelope reduce your savings further.
4) The redemption value of the coupons is often very low.
5) The promoter says they will try to fill the order, but makes no promises. If you send in your order form and do not receive all of the coupons you requested, you’re simply out of luck.
6) The expiration dates are often within a month or two of the time of receiving the coupons. That results in difficulty in using all the coupons if multiples of the same coupon are requested.
The result of all this is that the consumer receives very little, if any, real savings from these coupon books. You can read more about this scam at ftc.gov
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