On Wednesday, the Montgomery County Sheriff’s Department in Texas announced they have made several arrests in a coupon fraud operation. According to police, detectives identified 87 people across 23 states involved in the scam and the case is now in the hands of the FBI.
During a press conference, Capt. Tim Holifield of the Montgomery County Sheriff’s Department said his team uncovered a “Dark Side” coupon group that sold fraudulent coupons made to resemble those produced by various product manufacturers. Police started the investigation in November 2020 after one individual was identified as having allegedly used these counterfeit coupons to buy $200,000 worth of products in a single year.
The coupons were sold through various social media sites and were often customized to meet the requests of those ordering them, police said. Authorities say that those responsible for creating the fraudulent coupons did so with the same printers used by manufacturers, and set up in a “sweatshop” style setting.
“They had a number of computers lined up and printers and were just going through the ink and the tape, just continuing to mass-produce these coupons,” Holifield said during the press conference.
Retail employees told officials that the coupons would ring up as something different than the intended product. But because the coupons contained a picture of the intended product — diapers, for example — the clerk would accept the coupon and the customer would receive the item at the discounted rate.
But because the coupons were fraudulent, police said the store was not reimbursed for the coupons by the manufacturer.
“By their presentation of these fraudulent coupons, they’re actually stealing from the merchants themselves,” said Holifield. “As they [the merchant] send the coupons to the printing house, to be reimbursed for the coupons, they get zero in return.
“So they [the merchant] suffer that loss,” he continued. “And this, in turn, affects all retail consumers because the retail stores have to raise prices.”
The coupons were used at stores such as Walmart, Target, HEB, Kroger and Walgreens, police said.
Three people were arrested in Montgomery County, but officials say that they have identified a total of 23 people throughout the county that were allegedly involved in the scheme, and authorities believe more people will be identified in the coming weeks and months.
According to police, Cassandra Clark, Sheilo Cruz and Rudolph Cruz, whose ages and addresses were not released, have been arrested and charged with engaging in organized criminal activity in connection with the investigation.
Officials say that the fraudulent couponers have allegedly stolen millions of dollars worth of products.
“Preliminary results from a clearinghouse that processes valid coupons for retailers have documented more than $9.7 million dollars in losses,” said the police in an official statement, “and project there could be another $10 million in losses as the investigation continues.”
With suspects in 23 states, the case has now been turned over to the FBI and will be prosecuted by the U.S. Attorney’s Office. Police say that the suspects face charges of organized retail theft on the state level as well as theft on the federal level.