Following the life cycle of coupon after it's redeemed

Jill Cataldo

Q: What happens to the coupons after I use them at the store? Where do they go?

A: I've devoted lots of time to the best ways to use coupons. But occasionally, I hear from readers who want to know more about the life cycle of a coupon. What happens to those little pieces of paper once they leave our hands in the checkout lane?

For starters, a consumer takes a coupon, purchases the product and hands the coupon to the cashier. The cashier scans the coupon, puts the coupon in the cash register's drawer ... then what?

Typically, after the register totals are balanced for the night, the store will collect the coupons and place them in a bag. At that point, the coupons need to get from the store to the manufacturer for reimbursement.

Every manufacturer coupon displays a physical mailing address where the store can send the coupon and receive reimbursement. But with thousands of coupons coming in each week, few stores have the time or staff to sort through them all.

Enter retail clearinghouses, which take on much of the work of processing coupons. On the store's behalf, a clearinghouse sorts, scans and catalogues the loose coupons, separating them by manufacturer. The clearinghouse also takes care of reimbursement, issuing an invoice to each manufacturer for the total amount of coupons submitted for their products during the specified time period. Some clearinghouses receive the reimbursement back from the manufacturer and then send the payment to the store. Others invoice on behalf of the store, and each manufacturer reimbursing the store.

Of course, the clearinghouse gets paid for its work. The fine print on a coupon states that the store will be reimbursed 8-12 cents more than the face value of the coupon. Clearinghouses take some or all of those extra pennies on each coupon in exchange for their services.

A clearinghouse catches expired, counterfeit or fraudulent coupons. If stores accept many fraudulent coupons, they will not be reimbursed.

What might make a manufacturer suspect coupons were fraudulently redeemed? I'll discuss this next time, but here's a clue: It has to do with the way the coupons are cut.

Jill Cataldo is a coupon workshop instructor, writer and mother of three. Learn more about couponing at her website, www.jillcataldo.com. Email couponing victories and questions to jill@ctwfeatures.com.