Chris Balsiger, who ran International Outsourcing Services for years, is facing a 27-count federal indictment that says he schemed to bilk some of the nation's largest coupon-issuers out of at least
$250 million. Balsiger and others also face a civil lawsuit by Kraft Foods, PepsiCo and other coupon issuers charging racketeering and fraud.
By 2001, Balsiger had built IOS into the
dominant coupon clearinghouse, with market share of about 70%. It had 6,000 employees and was heading toward $200 million in annual sales, about half from coupon processing, and the other half from
other outsourcing services, such as processing checks for banks. "It's a lying, cheating, dirty business," says Balsiger of the industry, but he calls the allegations "bizarre" and says he's innocent
of all charges.
Coupons are still a good marketing tool, industry experts say, attracting consumer attention even if they never actually are used. Despite low redemption rates--about
1%--manufacturers issued 279 billion coupons in 2006, the most in a decade. That means there are a huge number of unused coupons in circulation--representing discounts worth billions of dollars.
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