Welcome to the Department of Justice, Iowa Attorney General Tom Miller

For immediate release - Wednesday, August 18, 2004.

Contact Bob Brammer - 515-281-6699.

Grocery-Coupon "Business Opportunity" Scheme Barred From Iowa

Texas company must refund more than $100,000 to Iowa victim.
"This business opportunity scheme won't claim any more Iowa victims," Miller said.

DES MOINES.   Attorney General Tom Miller announced today that a Texas company that promotes a business opportunity supposedly based on grocery coupons has been barred from operating its program in Iowa, and must refund over $100,000 to an Iowa consumer.

Coupon Connection of America, Inc., based in Houston, Texas, and its owner, Texas resident Don Farmer, are barred from operating their business opportunity in Iowa under a formal agreement that arose out of allegations that the company violated Iowa's Consumer Fraud Act.

"This was a so-called business opportunity pushed by Coupon Connection of America," Miller said. "It was supposedly based on selling books of grocery coupons supplied by Coupon Connection to individual consumers and to organizations to re-sell as a fundraiser, but we alleged that people were unable to make back their investment, let alone make a go of the business," he said.

"People who invested in the business opportunity quickly found that there was very little demand for the coupon books, either on the part of individuals or organizations," Miller said. "Coupon Connection claims the opportunity leads to riches, but we suspect they have known for years that in fact it leads to losses and ruin."

Miller said Coupon Connection of America had used direct mail solicitations and high-pressure sales tactics to entice a Fairfield, Iowa, woman, Mayumi Koide, to spend tens of thousands of dollars for the company's "business opportunity." Miller's office required Coupon Connection to provide a refund of over $100,000 to Koide, the only known Iowa victim of the alleged scheme.

Miller said the solicitation Koide received from Coupon Connection promoted an "easy," "million-dollar opportunity" business selling books for obraining grocery coupons. Miller noted that the idea of building a business based on saving money on groceries had clear appeal - as the company brochures proclaimed, "Everybody buys groceries" -- but, in reality, Miller said, there appears to be virtually no demand for the coupon books.

The company's brochures also featured glowing testimonials from individuals who supposedly had successfully applied the money-making formula. Koide contacted the company to express an interest, and was then subjected to a series of high-pressure phone calls from company representatives. They told her that to succeed she needed to pay substantial sums for supplies, mailing lists, and promotional services. They urged Koide to pay for higher levels of Coupon Connection promotional support by going ever further into debt on her credit cards.

By the time Koide discovered that there was no way she could make the business profitable, she had paid Coupon Connection over $100,000 and was deeply in debt. Koide appealed to the company for a refund, but was turned away by the company, which consumer protection staff concluded was practiced at "stiff-arming" victims who asked for their money back.

Questionable Testimonials:

The Consumer Protection Division contacted several of the individuals prominently featured in testimonials about their "success stories" with the business opportunity. But the Division found:

  • None of the testimonial-givers contacted was still pursuing the business opportunity.
  • Two testimonial-givers were on the Coupon Connection company payroll. One of them admitted that the market for the coupon books was "dying," and that he himself had lost money trying to pursue the business opportunity.

  • Another testimonial-giver was the cousin of the owner of Coupon Connection, Don Farmer.

  • Yet another denied that he had ever had the business success claimed by Coupon Connection, and said he did not even use the coupon books himself to try to save money on groceries.

The Consumer Protection Division invited Coupon Connection to provide the name of someone who'd been successful with the program, but company representatives declined to do so.

"Consumer testimonials can be powerful persuaders," Miller said. "That's why testimonial success stories must be scrupulously accurate, and anything that compromises the reliability of a testimonial must be fully disclosed. Coupon Connection violated both of these basic principles."

Other details:

Miller said the Consumer Protection Division uncovered many victims in other states, including Colorado, North Dakota, Ohio, Oklahoma, South Carolina, Vermont and Wyoming. Eight of the victims had individual losses exceeding $5,000, and some ranged as high as $60,000. "All had similar stories to tell," Miller said. "They were ensnared by slick promotional claims and high pressure sales, only to invest in a business that no amount of hard work could make successful. Coupon Connection of America has crushed a lot of dreams and hurt a lot of good people."

Miller said his office is pleased to get a refund for Koide of over $100,000 and to bar the company from operating its business in Iowa. "But it's a shame anyone anywhere could still fall prey to this operation. We'll make the evidence we uncovered available to any other law enforcement authorities who also want to bring these schemers to justice," he said.

Coupon Connection now is strictly prohibited from marketing its business opportunity in Iowa. It must not accept payments from Iowans, and must not solicit Iowa residents for its programs. Coupon Connection and Farmer also have agreed that violations of the agreement "will trigger the maximum allowable civil penalties" in a suit brought by the Attorney General's Office.

"This business opportunity scheme won't claim any more Iowa victims," Miller said.

Note: Deceptive business-opportunity schemes have been around for decades. For a good brochure and synopsis on "Business Opportunity" scams, prepared by the Federal Trade Commission, go to: http://www.ftc.gov/bcp/conline/pubs/invest/vending.htm The brochure has good tips on how to identify questionable "biz-opp's" and how to avoid being cheated.

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