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Silk Road Coupon Counterfeiters Busted

Silk Road Coupon Counterfeiters Busted
[Photo: Flickr user Carol Pyles]

The deep web isn’t just for manufacturing drugs, trading stolen credit card numbers, or buying weapons. It’s also used for coupon fraud. Yes, coupon fraud. On May 28, the Justice Department announced they had brought charges against a man selling counterfeit coupons on the Silk Road. And it seems to have been surprisingly lucrative.

On the now-shuttered site and successor site Silk Road 2.0, a user known as either ThePurpleLotus or TheGoldenLotus sold packages of counterfeit coupons for approximately $25 in Bitcoin. Buyers could then print out and spend these coupons at local stores or resell them in their communities. Each package had hundreds of dollars worth of fake coupons.

The Department of Justice is charging a 30-year-old Louisiana resident with running the bootleg coupon business online. Beau Wattigney, an IT employee in the New Orleans suburbs, is charged with conspiracy to commit wire fraud and conspiracy to commit trademark counterfeiting. He’s accused of selling the coupon packs on Silk Road, and of even selling videos teaching DIYers how to make their own fake coupons.

The fake coupons sold by ThePurpleLotus and others essentially rely on either self-checkout counters at chain stores, which have automated coupon verification systems, or on the goodwill of small businesses or independent stores to retain customers.

Even if the coupon codes they contained were fraudulent, they were designed to look identical to coupons obtained from legitimate services like RedPlum and Coupons.com. These coupons are wildly popular with shoppers, particularly in suburban and exurban areas, and many struggling businesses feel they can’t afford to alienate customers over a coupon that won’t scan correctly. In many cases, stores don’t realize coupons are fraudulent until after the fact.

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