EBAY ENACTS NEW COUPON POLICY

CHRISTINE BLANK

Following eBay's decision to limit the sale of coupons on its online auction site, food retailers that have banned the acceptance of Internet coupons are beginning to revise or reverse that policy.

In mid-January, eBay announced that individuals auctioning coupons on its site will not be allowed to sell electronic "scanned" coupons, and would be limited to two coupons per listing for sales of home-printed Internet coupons or coupons for free products.

In addition, eBay said it would ban the sales of bulk coupons -- more than 20 coupons for the same item or more than 100 total coupons.

Ebay also said that sellers must refrain from "placing clear, unaltered scans of coupons in their listings, that could be copied, printed and redeemed in stores." Finally, the site now requires the coupon seller to send purchased coupons via direct mail, not e-mail, lessening the likelihood that the coupon will be electronically scanned and distributed. Ebay became the focus of attention last summer after several incidents of coupon fraud were reported in the Atlanta market, prompting retailers there and elsewhere to stop accepting coupons perceived to be scanned or downloaded from the Internet. Industry sources said fraudulent coupons -- mostly for free products -- were being copied and sold via the auction site.

Ebay's new coupon policy represents "the biggest win-win we could have," according to a spokesman for eBay. "We wanted to continue to allow people to sell coupons on the Web site, but we have always gone after the sale of fraudulent coupons."

The eBay policy change came about after Food Marketing Institute and Grocery Manufacturers of America asked the site to change its policy last year. The three worked together on the wording of the new policy.

Both FMI and GMA praised the new eBay policy. "We are extremely pleased that eBay recognizes that some coupon sales have a higher potential for abuse than others, and for working with the industry to ensure that eBay is not a venue for fraudulent, coupon-related transactions," said C. Manly Molpus, president and chief executive officer of GMA.

Ebay's announcement has prompted some retailers to change their coupon policies. For example, effective Feb. 1, Weis Markets, Sunbury, Pa., will reverse its ban on Internet coupons, except those for "free" products or offering more than a $5 value.

Meanwhile, online coupon distributors, which have been encouraging retailers to accept all but free-product coupons since the fraud incidents hit last year, report that retailers that had banned Internet coupons are revisiting their policies.

"We are in discussions with a number of retailers in the Southeast, and are pleased that they're reconsidering [bans on internet coupons]," said Heather Harde, senior vice president of business strategy and development for Smart Source, a division of News America Marketing.

Several other chains will reverse their policies in the next 45 days, according to Steven Boal, CEO of online coupon provider Coupons Inc. "Now that eBay has responded, we have heard from a number of retailers directly that this is what they were holding out for," Boal said. Some chains are limiting bans to coupons for free products or for products over $5.00 or $7.50, he said, and some will not allow more than one coupon for a single product. Some also restrict coupons that do not scan properly.

Yet, some supermarket chains remain wary about reversing their bans. "We haven't changed our policy yet. We continue to monitor coupon redemptions," said Rich Savner, spokesman for Pathmark. The chain's ban applied only to coupons for free products.