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DSS Comments On Landmark Coupon Fraud Case

ROCHESTER, N.Y., July 17, 2012 /PRNewswire/ -- Document Security Systems, Inc. (NYSE Amex: DSS; "DSS"), a leading developer and integrator of cloud computing data security, Radio Frequency Identification ("RFID") systems and security printing technologies which prevent counterfeiting, product diversion and brand fraud, commented today on the recent landmark case of coupon fraud discovered in Arizona. (See http://www.azfamily.com/news/PD-Counterfeit-coupon-operation-busted-in-Phoenix-161960155.html for more information.)

The case involves the production and sale of counterfeit coupons for products offered by 40 of the nation's largest brand owners.  Approximately 4 years ago, high quality counterfeit coupons began surfacing in the United States from an unknown source.  Several of the affected brand owners, along with the Coupon Information Council (CIC), hired private investigators to pursue the source of the counterfeit coupons. 

The investigation led to 3 homes in Arizona where Police and Federal agents seized boxes of coupons, vehicles, guns and other property. The seized coupons were variations and reproductions of previously valid coupons and had a value in excess of $25 million dollars with the total estimated economic loss to the companies of between $400 million and $600 million.  The ringleader of the coupon scam was determined to have brought in the fraudulent coupons from overseas and sold them on a website for 50% of face value.  According to the article, the CIC is calling this the largest counterfeit coupon case the industry has ever seen.

Patrick White, CEO of Document Security Systems commented, "This case of coupon fraud demonstrates the severity of the issue and the growing financial loss that brand owners have been experiencing.  Coupons that were once unprotected, were counterfeited, altered and mass produced outside the country and then imported for resale. While use of these coupons is illegal, consumers are purchasing the counterfeit coupons online, unaware of the scheme and associated risk. The quality of the re-engineered counterfeit coupons is high enough that cashiers and stores are accepting and processing them on a regular basis without knowledge of the fraud."   White continued, "The CIC has been working diligently with the brand owners to help them protect their coupons and also educate the public as to the security features that now appear on coupons.  I commend them on their diligent work in tracking down the source of these fraudulent coupons.  In our opinion, the answer to this growing problem is 3-fold: use of security technologies on the coupons, commitment to coupon authentication at the retail level, and consumer education on the risks of unlawful use of counterfeits coupons."

DSS offers a wide range of state-of-the-art patented solutions against counterfeit coupons for both traditional printed coupons and digital coupons. DSS works directly with brand owners to protect the coupon's images and information from being captured easily and accurately on copiers and desktop scanners.   DSS has experienced increased demand from brand owners for coupon security over the last few years and very specifically over the last few months.

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