“What’s the harm in misusing coupons?” coupon fraudsters often ask. The store makes a sale and gets reimbursed by the manufacturer, while the manufacturer moves products and justifies the continued issuance of its coupons. So everyone comes out ahead, right?

Ethical couponers simply shake their heads at these fraudsters’ attempts at rationalizing their behavior. But a new study, surprisingly, suggests that the fraudsters might actually be right.

When Ethical Transgressions of Customers Have Beneficial Long-term Effects in Retailing” appears in the newest edition of the Journal of Retailing. The authors court controversy by theorizing that “an initial ethical customer transgression may open the door to behave in legitimate ways on an ongoing basis.”

In other words, unethical shoppers may turn out to be some businesses’ best customers.

The authors reach their broad conclusions after conducting some specific research with an online retailer in Switzerland. The retailer allows customers who sign up for a loyalty account to earn rewards. But some customers, in violation of the retailer’s policies, sign up for multiple accounts in order to earn more rewards.

This, you may recall, is similar to what happened with Target’s former Cartwheel Perks loyalty program last year. New account holders were automatically given enough loyalty points to earn a reward upon signup. So why wait to accumulate enough points for another reward, when you could just open a new account under a different name, and get another reward right away?

Target ultimately pulled the plug on Cartwheel Perks. But the Swiss retailer – and the researchers studying the retailer’s program – noticed something interesting. “Customers registering multiple accounts in violation of the retailer’s policy comprise fewer than 11.5% of accounts, yet generate more than 27.6% of the retailer’s revenue,” the study’s authors write. “Specifically, their behavior leads to higher retailer revenues and greater engagement.”

So the retailer didn’t crack down on the rule-breakers. In fact, the researchers conducted a survey of retail owners and managers and found that more than 80% said they were “inclined to tolerate unethical customers whose actions have beneficial effects.”

That’s… kind of troubling. “A more practical and actionable compromise,” the researchers write, “is that the retailer should change its policies.”

So how do coupons fit into all of this? If a coupon fraudster is a good customer, should a retailer just let them do whatever they want? Or “change its policies” to say that coupon fraud is A-OK?

It depends, apparently. The study’s authors surveyed consumers and asked them to rank a list of specific customer transgressions, from least to most serious. Registering multiple accounts in order to get rewards was ranked the least serious. “Using merchandise for an event, then returning it to the retailer for a full refund” was ranked the next least serious offense, followed by “using counterfeit coupons to get a discount on merchandise.”

The most serious transgressions were blatant crimes like using a stolen credit card or shoplifting.

The key is to distinguish between unethical and illegal behavior, the researchers state. “Retailers will frequently encounter customers who transgress ethically while staying within the law,” they write. Their research is meant to call attention to “the importance of distinguishing between unlawful and lawful unethical customer behavior for retailers, and the need to consider lawful ethical transgressions in a nuanced way.”

So should retailers be responding to coupon fraud “in a nuanced way”? Is improperly using coupons a crime? Using counterfeit coupons sure is. But what about “glitching”, or buying and selling coupons online?

Coupon issuers sometimes try to discourage unwanted activity by blurring the line between unethical and illegal behavior. Consider Kimberly-Clark coupons, which state that “reproduction, alteration, proliferation, or sale of this coupon or its contents” could result in “civil and criminal penalties up to $2,000,000 and/or imprisonment.”

You’re unlikely to be thrown in the slammer for selling a coupon – but Kimberly-Clark sure makes it sound like you might. So there’s a “nuance” for you.

“Glitching”, or using a coupon on a product for which it’s not intended, is sometimes construed as theft – and some glitchers have indeed been busted. But many glitchers tend to like visiting a favorite store or two to ply their trade. And they may buy a lot of merchandise in addition to the items on which they’re misusing coupons. The manufacturers that issue those coupons don’t want them used improperly – but could retailers benefit by looking the other way? Some retailers are alleged to have done just that.

“We advance the idea that when deciding how to respond, the retailer should distinguish between unlawful and lawful unethical behavior,” the study’s authors write. “When the behavior is lawful but unethical, the retailer should consider what makes it unethical and longer-term consequences for itself and its other customers.”

One example they present involves retailers with liberal return policies. “When customers abuse the policy, it can lead to return fraud,” they note. However, such policies “have the potential to increase store sales because consumers visiting the store to return an item may be exposed to things on display and become more likely to buy other products.”

Ultimately, the study is not condoning consumer fraud. Nor does it pass judgment about where to draw the illegal-versus-simply-unethical line when it comes to counterfeiting, glitching and selling coupons. Instead, “this research provides retailers food for thought,” the authors write. “Retailers should never yield to ethical customer transgressions without carefully thinking about the nature of the behavior. The ends cannot justify the means – they only indicate the necessity of rethinking the means.”

From manufacturers looking to clamp down on coupon fraud, to retailers weary of arguing with fraudsters at the checkout, and consumers trying to see what they can get away with – the authors of this controversial study have certainly given everyone something to ponder.

Photo by ePublicist

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