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Coupons for free products are usually valid only up to a certain value, so the company issuing the offer doesn’t pay more than it anticipated in order to give away free items.

But a dispute over a coupon with a particularly high maximum value, which left a company on the hook for far more than it expected, is now the subject of a multi-million dollar lawsuit.

The June 30th edition of the SmartSource coupon insert contained a “buy two get one” coupon for any eye, lip, face, skincare or fragrance products from the cosmetic brand Wet N Wild. Wet N Wild items generally range in price from under a dollar to nearly $20. So the coupon stated that it was valid on products valued at up to $19.99.

But coupons offering free products typically include a box where the cashier is told to write in the price of the product on which the coupon was used. This coupon didn’t.

So with no way of knowing exactly how much reimbursement they owed retailers who accepted the coupon, Wet N Wild owner Markwins Beauty Brands and its subsidiary Physicians Formula were charged the maximum $19.99 value, regardless of whether shoppers used the coupon on a $19.99 makeup kit or on a 97-cent lip pencil.

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Markwins and Physicians Formula apparently balked at paying that price. So now their coupon processor is suing them for nonpayment of more than $2.1 million.

Inmar filed a federal lawsuit against the two companies this past Friday, alleging that they are failing to pay for the coupons that were redeemed. Both companies are under contract with Inmar, which serves as their coupon processor – the go-between who reimburses retailers the value of the coupons they accept, then collects that money from the manufacturers who issued the coupons.

Up until about a week after the coupons expired at the end of July, “Markwins reimbursed Inmar for amounts paid to the coupon submitters,” Inmar’s lawsuit reads. “However, beginning with the August 8, 2019 Inmar invoice, Markwins refused to reimburse Inmar,” and Inmar says Markwins instructed Physicians Formula not to pay either.

As Inmar’s invoices, plus late fees, continued to go unpaid, Inmar says the two sides “exchanged correspondence regarding the disputed invoices, but were unable to reach a resolution.” So now Inmar is turning to the courts.

The dispute traces its origins back to May, when Markwins first asked Inmar to create the bar code for its coupon. When Markwins asked that the maximum coupon value of $19.99 be embedded in the bar code, Inmar’s lawsuit states, “an Inmar representative emailed Markwins stating that ‘I would STRONGLY SUGGEST you DO NOT have a max value set as high as $19.99’ and attaching documents about how to mitigate over-redemption and counterfeiting.”

But “Markwins dismissed Inmar’s concerns,” the lawsuit goes on, “and asked Inmar to proceed with issuing the coupon barcode immediately, stating it was ‘mega urgent’.”

On June 30th, the coupon showed up in Sunday newspapers across the country. That’s when Inmar says it discovered that “Markwins failed to include a line on the face of the coupons for the retailers’ cashiers to write in the actual value of the lowest-value item the consumer received for free.” Even if cashiers manually entered the correct value into the cash register, giving coupon users the proper discount and not the full $19.99, the lack of a written-in value on the coupons themselves means the coupons that the retailers sent in for reimbursement “defaulted to the $19.99 maximum value listed on those coupons, per standard industry practice,” Inmar explained.

In other words, Inmar says it paid retailers – and Markwins and Physicians Formula now owe Inmar – $19.99 for each and every one of the thousands upon thousands of coupons that were redeemed.

A representative for Markwins did not respond to a request for comment on the case, while Inmar declined to comment.

Unmentioned in the lawsuit are some mitigating factors that may have caused even more of the coupons to be redeemed than Markwins had planned. First, there were a number of deal-layering opportunities during the four short weeks the coupon was valid. Couponers shared deal scenarios online, where they could combine the coupon with sales and drug store rewards programs to get several Wet N Wild products – not just one – for free.

That caused the coupons to become hot commodities among those who buy and sell coupons online, further highlighting the ongoing issue of coupon insert diversion. The coupon industry has long pointed out that, aside from purchasing multiple newspapers, there’s no legitimate way to obtain mass quantities of coupon inserts – so those who obtain them in bulk and make them available for sale, are likely peddling stolen property. But many couponers eager for a deal are apparently willing to look the other way. “I just ordered 10 more sets!” wrote one member of a Facebook coupon group, eager to get many more free Wet N Wild products.

Finally, even though it expired in July, this buy-two-get-one Wet N Wild coupon is still out there – and still being used in stores. That’s because, even though the coupon had an expiration date of July 28th imprinted at the top, the bar code did not contain an embedded expiration date at all.

And don’t think that some less-than-ethical couponers don’t know it. “Wet N Wild is a true ‘no expire’ coupon!!!!” one coupon group member wrote. “These coupons do not expire,” another added. “I just cut the top off of them, no questions, no concerns, constantly using them!”

Ultimately, though, it’s not couponers’ fault this coupon was so problematic. Inmar’s lawsuit puts the blame squarely on Markwins and Physicians Formula. Together, Inmar says they owe it a total of $2,153,111.48 and counting, including past-due charges, interest and attorneys’ fees. Inmar is suing for breach of contract, unjust enrichment and unfair and deceptive trade practices.

If all this talk of makeup and savings has you looking for a legitimate discount on cosmetics, know that there are currently no valid insert coupons available for Wet N Wild products. And depending on how this dispute plays out, and who ends up footing the bill for this very expensive promotion – it could be a very long time before you see a coupon for Wet N Wild again.

One Comment

  1. Walmart is guilty of this immoral behavior. I’ve literally had verbal altercations with cashiers and shift managers over their decline to write in the actual value I received from coupons that have high values, yet items cost much less. There explanation was that they’ll write in the value later. I argued that that was total bullshit, because how are they going to write in the amount I actually paid since coupons are collected in bulk from all registers at a certain time. Walmart thinks that couponers just don’t care. I do. I’ve argued for years that it is our responsibility to use coupons honorably and protect couponing from scumbag stores (Walmart, Dollar General) from abusing the generosity of manufacturers.

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