Coupon fraud, ethics and etiquette have been a hot topic since EXTREME COUPONING, the series, debuted on TLC last week. Coupon maven Jill Cataldo took the debate up a notch with this post showing screen shots of what looks like one participant not playing by the rules.

But what are the rules, really? Most of the coupon do's and don'ts you see come from coupon bloggers and store policies, or from store employees who may or may not know what they're talking about. I have a few posts and a column brewing about coupon ethics, fraud and etiquette, and I wanted to talk to someone who is truly in the know about coupon law.

So I interviewed Bud Miller, executive director of the Coupon Information Corporation. The CIC is an organization through which manufacturers fight coupon fraud -- its members include most of our favorite coupon-issuing companies like P&G, Kraft and Kellogg's. And yes, Miller realizes that his name is made up of two beer brands. Bud. Miller. Just his introduction had me reaching for my coupon file.

From looking at the CIC Web site, you can see that the organization's main concerns are "big fraud," like widely distributed counterfeit coupons and fake stores. They publish the warnings about counterfeits that you may have seen in a big binder at your local grocery store. However, Bud took the time to address all kinds of consumer questions -- issues which are also of concern to his members. I was surprised by the amount of time he spent talking about buying and selling coupons -- something that I didn't realize was such a big problem to manufacturers.

I also really appreciated a number of activities for which he gave a green light, like getting free stuff and combining coupons, rewards and rebates. Some of those statements are at the end of the interview, if you want to skip to that.

(All his quotes are direct. My questions are paraphrased from memory.)

FRUGALISTA: Did you watch Extreme Couponing?

BUD MILLER: Yes

FRUGALISTA: Did you see that some folks online are accusing one of the shoppers of coupon fraud?

BUD MILLER: Yes, but I can't give specifics. (When I asked Bud to clarify this later, by email, he said "We are unable to comment on the allegations at this time.")

FRUGALISTA: In the videos, it looks like this shopper, J'aime Kirlew, was using coupons labeled as being for one product, but buying a different product from the same manufacturer. Is that really a big deal?

BUD MILLER: It's a criminal act. You need to use the coupon only within the terms and conditions printed on the coupon. In English and Spanish or whatever the local language is. A coupon is a contract and an offer. You have to follow those terms. Bar codes are a method of processing coupons.

FRUGALISTA: I've heard people say that the bar code is the "real" writing on the coupon, so the acceptable uses of the coupon are really whatever it's coded for, no matter what the words say.

BUD MILLER: They're wrong.

FRUGALISTA: I can see how bad this would be if you are taking a high-value coupon for an expensive product, and applying it to a much cheaper product. But what if the product is around the same price, like a company's regular toothpaste brand and then the new version with a new feature advertised on it? Do manufacturers really care in a case like that?

BUD MILLER: Yes they do care. Coupons generally have their own budgets. That goes into the whole accounting system ... controlling expenses, managing the business.

The good news is that the new bar coding system should eliminate most of this. (Stores are) in the process of transitioning (now). (This is why on some coupons now you see two bar codes): you've got the older one and you've got the newer codes ... They're all in the process of moving towards it.

FRUGALISTA: I've heard anecdotally from people who work for manufacturers that when the varieties and prices are similar, coupon bloggers care more about these distinctions than the manufacturers themselves.

BUD MILLER: That's not the idea I get from our members.

FRUGALISTA: Sometimes shoppers don't even notice that the coupon is for a specific variety. It's happened to me.

BUD MILLER: We've never had a situation where somebody just accidentally committed coupon fraud. Mistakes can happen, and that's not considered fraud ... but if somebody does it time and time again, and has knowledge and forethought and planning to commit fraud (that's different.)

FRUGALISTA: What was your overall reaction to EXTREME COUPONING?

BUD MILLER: The problem with this show it's very exploitative. It makes everybody look bad, frankly. It frankly creates expectations that are unreasonable. Most people don't want to spend five hours preparing for a shopping trip. This whole thing is kind of sad.

FRUGALISTA: What was your members' reaction to the show? Has there been a flurry of panicked conference calls about it? Are the members angry about the show? Will there be policy changes resulting from the show?*

BUD MILLER: No, there is no "panic."  Each company will make its own, independent business decisions regarding the situation. 

FRUGALISTA: Is it OK to use as many coupons as you can get? Or is over a certain number of coupons considered fishy?

BUD MILLER: As long as you're getting them directly from the source, they should be fine. Where you go to the extent that you're buying coupons off of eBay, that's inappropriate and it violates the conditions printed on the coupon. Individual retailers have the right to limit how many coupons they'll accept. They're the ones taking the risk, so they have no obligation taking coupons... (They do it because customers like it and) it moves product.

FRUGALISTA: On EXTREME COUPONING I saw one shopper cutting many coupon inserts at once with a paper cutter. Then I heard that this is called "gang cutting" and if a store turns in a lot of gang-cut coupons, it could be investigated for fraud.

BUD MILLER: It's very possible.

FRUGALISTA: So even if I'm using coupons I got legitimately, if I cut them all together I could be getting my store in trouble?

BUD MILLER: Gang cutting is just one of many signs (and not something investigators would draw a conclusion on alone.)

FRUGALISTA: Here in Illinois, one of our local stores, Jewel-Osco, said that customers can redeem coupons for alcohol and another product without buying the alcohol -- even though that's not what's printed on the coupon. They say this policy is due to Illinois state law.

BUD MILLER: If a law overrides (the terms printed on the coupon), a law overrides that... it's probably not a huge issue nationwide.

FRUGALISTA: What else should people watch out for?

BUD MILLER: Never pay money for a coupon. That will pretty much protect you from most of the counterfeits and issues like that.

If it seems too good to be true, it probably is. If somebody emails you a coupon for a free product and you can see it on the screen, there's a 99 percent chance it's counterfeit. Manufacturers do not distribute coupons in that manner. At this point I'm not aware of any (free) product coupons (distributed this way, not since 2002.)

FRUGALISTA: If I order coupons online, what are the odds that I'll receive a counterfeit?

BUD MILLER: We've found many, many examples of free product counterfeits being sold on eBay ... you should not pay money (for coupons).

FRUGALISTA: But aren't most of these coupon clipping services just stay-at-home moms selling real coupons they clipped from Sunday papers?

BUD MILLER: I'm not aware of any legitimate coupon clipping service out there ... Keep in mind that it inherently violates the terms and conditions of the coupons issued. In the event they say they get the coupons from the manufacturer, (you should contact the manufacturer.)

FRUGALISTA: If there's a coupon sticking to a product in the store, can you peel off the coupon and take it home without buying the product right then?

BUD MILLER: That is probably one of the more controversial ones out there. The coupon on the package is intended for the person buying the product. It'd be good if most people respected it that way. But I'm not aware of any law on that specifically. If one damages the product in order to get the product, then there's a problem.

FRUGALISTA: So it's more a matter of coupon etiquette?

BUD MILLER: Etiquette might be one word to use ... You've seen reports of people just taking every wine tag they can, and then they'll resell it. Coupons are not meant to be taken by professional scavengers to be resold. That violates the terms and conditions of the coupon and it puts those persons in (danger of civil action too).

FRUGALISTA: Oh, wine tags. I always thought there was a distinction between peeling coupons off other products, versus picking up a winetags or a stickie loosely attached to a case of beer.

BUD MILLER: I don't see it. ... If you're an avid couponer and you see a product with a coupon, a wine tag on it. Right next to it is a competitor product that doesn't have a wine tag on it. The incentive is to try the product with the wine tag ... (But) it's not like there's the coupon police marching up and down the aisles.

FRUGALISTA: What about using coupons on trial size products?

BUD MILLER: If the manufacturer doesn't limit the size, by all means use it on the trial package. Now if it says only good for XYZ size, it's only good for XYZ size.

FRUGALISTA: What about double dipping by using a manufacturer's coupon up front, then getting a reward from the manufacturer like a Walgreens Register Reward or Catalina?

BUD MILLER Go for it. Do that and a store rebate on top of it if you can. Do a triple play: buy the product while it's on sale, with a coupon and get a rebate. ... If it's out there, it should be used. The manufacturers want these to be used. They don't want somebody to buy a thousand dollars worth of product using coupons that they purchased off the Internet.

FRUGALISTA: What if the product is priced at the same value of the coupon, so that a cents-off coupon makes the coupon free?

BUD MILLER: If it makes the product free, it becomes free. Take advantage of that. That's not always what's intended. (But) the manufacturers have a responsibility to plan and do their promotions appropriately.
Overage is more controversial. That's where you get paid to buy the product. ... We don't have a policy on that (right now).

FRUGALISTA: Oh yeah, I saw that Walmart published a coupon policy saying they would give consumers back cash from coupons if the coupon was worth more than the product price.

BUD MILLER: That was quite a surprise.

-- end of interview --

A final note from Frugalista: The CIC represents coupon issuers, not law enforcement, and I have not personally researched any specific laws that he's referring to. So keep in mind you are getting the manufacturer's point of view in this interview. But this organization does know its stuff, and I for one would not want to be in its cross hairs. According to the Web site, "The CIC and its members have worked with Federal, State and local Law Enforcement officials on every significant coupon fraud case since CIC began operations in 1986. As of this time, CIC has not lost a single case."

Here's a link from the CIC page about a recent arrest for passing counterfeit coupons.

P.S. I just found this radio interview with Bud Miller; the intro calls him "one of the most controversial figures in couponomy." As I would have expected, many of the people who routinely buy and sell non-counterfeit coupons don't appreciate his stance on that topic.

P.S. 2. I sent Bud a follow-up email asking if the CIC has successfully prosecuted coupon clippers selling non-counterfeit coupons. There seem to be so many people doing this openly that I wondered if the CIC has been able to take any legal action at all to back up its stance that this activity is illegal. I'm awaiting his response, but for now, here's a link to eBay's coupon sales policy, which does allow the sale of manufacturer's coupons. Also, here's an online discussion among some folks complaining about interactions they've had with Bud. I offer these links without commentary, for now.

* I sent him that question as an email follow-up and inserted it into the interview on 4/14.