Explanations sought for coupon fiasco

Representatives for some of the nation's largest product manufacturers Wednesday demanded that a San Jose marketing firm fully explain how high-value coupons for about 40 of their products were released without their knowledge and without proper controls to prevent counterfeiting.

The demand comes on the heels of reports from coupon-clippers who say they had no trouble printing and using as much as $148 worth of grocery and toiletry coupons created by Vryl Mkt and accessed through the social-networking site Facebook and the company's Web site.

The coupons, for such things as shampoo, chocolate bars and mineral water, started as a small marketing experiment but mushroomed into a nightmare for retailers and consumers last week when manufacturers discovered there were no security protections on the coupons. That means that anyone can make copies and alter and distribute the coupons at will.

As many as 25 coupons that Vryl Mkt said it created for sales pitches made their way onto the Internet along with about 15 the company now says it offered on Facebook. (On Tuesday, the company said only 12 products were featured on Facebook.)

Consumers were angered when the firm advised retailers not to honor any of its coupons, leaving them to look like criminals when they tried to redeem coupons they had obtained legitimately.

On Wednesday, two industry groups called the coupons "unauthorized," and described the company's behavior as negligent and reckless.

"None of our members provided Vryl Mkt Inc. with permission to create or to release these coupons or to use our members' copyrighted or trademarked images," according to a joint statement issued by the Coupon Information Corp. and the Association of Coupon Professionals. The groups, which police the industry for coupon fraud, together represent more than 30 manufacturers.

Harry Soza, Vryl Mkt's president, acknowledged Wednesday that the firm did not have permission from all of the manufacturers to distribute coupons for their products on Facebook.

He would not say which products he did have permission to market through Facebook, only that his company — not the manufacturers — planned to reimburse retailers for coupons that were redeemed.

Soza said the experiment went awry when hackers tapped into a company database where it stored coupon images for sales pitches. He said the company contacted the FBI Wednesday afternoon to report the alleged breach, nearly two weeks after it happened.

But Hiko Kun, 24, an IT consultant from North Seattle and avid couponer, said the coupons were not stored in a database. Rather, he and others found some of them easily available through the company's Web site at virtually the same Web address as the Facebook coupons and were indistinguishable from the ones the company intended for its experiment.

"The 'demo' coupons should not have been hosted in the same place as the coupons released on Facebook, even that is common sense," he wrote in an e-mail to The Times.

"I am getting back into couponing and oftentimes have been able to bring down $200 subtotals down to under $10," he wrote. "I have done all of these purchases legitimately using manufacturer's and store coupons, but thanks to this Vryl Mkt scandal, I feel like, in the future, I will have my coupons scrutinized and it will be harder to get a good deal."

Susan Kelleher: skelleher@seattletimes.com or (206) 464-2508