Friday, May 30, 2008

MFDA Files Class Action Lawsuit on Behalf of Retailers, Wholesalers, and Retail State Associations Against Coupon Processors


Last week, Kotchen & Low LLP issued the following press release:

On May 22, the Montana Food Distributors Association (“MFDA”) filed a class action lawsuit on behalf of retailers, wholesalers, and state retail associations that administer coupon programs for small retailers. The suit alleges that these industry stakeholders have been harmed by two coupon processors – International Outsourcing Services and Inmar, Inc. – that have conspired to defraud retailers, limit competition, and breach fiduciary obligations to serve as bona fide agents of retailers in the coupon redemption process.

“I was outraged to learn about coupon processors’ secret scheme to defraud small independent retailers and am convinced that the MFDA and Montana retailers have suffered for years as result of this scheme,” McKee Anderson, the MFDA’s Executive Director, said. “I am pleased that the MFDA has an opportunity to lead an effort to correct those wrongs."

The law firm representing the MFDA, Kotchen & Low LLP, anticipates that the lawsuit will benefit stakeholders within the retail industry not only through the recovery for prior harm, but also through the restoration of transparency and competition to an industry that has been beset by fraud and collusion.

Kotchen & Low’s managing partner, Daniel Kotchen, stated, “Our research into the coupon processing industry revealed that coupon processors have systematically and secretly defrauded the very retailers for which the processors purport to serve as agents.”

“While there was already a criminal fraud suit and a civil lawsuit targeting IOS and its executives, the interests of retail industry stakeholders have not been represented in those actions,” stated Daniel Low, also a partner at Kotchen & Low. “In order to prevent continuing coupon fraud, industry standards and reforms should be considered, along with greater transparency regarding coupon processors’ fees
and services.”

The Washington, DC based law firm of Kotchen & Low LLP was founded earlier this year. The firm specializes in antitrust and fraud counseling and litigation and has a particular expertise in the consumer goods and retail industry. Visit http://www.kotchen.com/ to learn more about the firm, Mr. Kotchen, and Mr. Low.

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