HSI seizes 2 websites offering fraudulent store and rewards coupons and related PayPal accounts

GREENBELT, Md. — Two domain names and three PayPal accounts were seized Friday, in connection with a scheme to sell fraudulent store and rewards coupons, following an investigation by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI).

The domain names Sderclub.com and ccccpn.com were seized, as well as three PayPal accounts associated with the websites. Anyone who tries to access the websites will be directed instead to a banner that provides notice that the domain name has been seized by order of the court.

"The affidavit alleges that these internet websites are run by individuals in China who 'sell' counterfeit store credits," said U.S. Attorney Rod J. Rosenstein. "We are seeking to protect American consumers and honest businesses by shutting down fraudulent websites."

According to the affidavit filed in support of the seizure, Sderclub.com and its related domain name, ccccpn.com, offered online sales of store and rewards coupons, also known as "rewards checks" from the office superstore, Staples, Inc. According to the affidavit, the user of the website is offered dollar-off and rewards coupons that are purported to be valid by phone, online or in store. In order to make a purchase, the user must first establish an account with sderclub.com or ccccpn.com, and make an initial deposit of either $10 or $20 by initiating a funds transfer from their PayPal account. Once the user places an order from the websites, the purchase cost for the fraudulent Staples coupons are then withdrawn from the user's sderclub.com or ccccpn.com account. Coupons typically sell for $0.45 to $5.99 and provide an expiration date within a couple of days of the current date. Coupons are purchased and distributed electronically. The website advertises that the coupons can then be printed and used in the store, online or by phone.

The affidavit alleges that the Sderclub.com operators have developed a scheme to electronically create compromised and fraudulent coupons using coupon codes legitimately issued by Staples for use by Staples Rewards customers. The affidavit charges that the fraudulent coupons from sderclub.com or ccccpn.com expire within a couple of days in order to be used by the purchaser before the legitimate Staples customer, to whom the coupon was issued, redeems it. The "Rewards" coupons that are advertised on sderclub.com and ccccpn.com as "Staples 20 Recycle Coupon" are being counterfeited with legitimate coupons that were issued to active Staples customers.

According to the affidavit, between Dec. 20, 2011 and May 11, 2012, Staples Loss Prevention collected information on more than 100 transactions at sderclub.com/ccccpn.com, including a transaction in Prince George's County, Md. Staples confirmed that all store and reward coupons were fraudulent. The coupon codes listed on the fraudulent coupons had been issued to legitimate Staples customers and/or businesses.

Further, the affidavit alleges that between Jan. 13, 2009 and May 15, more than 102,553 transactions pertaining to the sale of fraudulent store and/or rewards coupons occurred on the three PayPal accounts seized. Each of the PayPal accounts was created by an individual residing in China.

This law enforcement action is an example of the type of efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force). Attorney General Eric Holder created the IP Task Force to combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers, and safeguard the nation's economic security against those who seek to profit illegally from American creativity, innovation and hard work. The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state and local law enforcement partners, and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders. To learn more about the IP Task Force, go to https://www.justice.gov/iptf.

This investigation was supported by the HSI-led National Intellectual Property Rights Coordination Center (IPR Center) in Washington, one of the U.S. government's key weapons in the fight against criminal counterfeiting and piracy. The IPR Center investigates commercial fraud, including false statements and deceptive business practices, prioritizing health and safety violations, U.S. economic interests and duty collection. As a task force, the IPR Center uses the expertise of its 20 member agencies to share information, develop initiatives, coordinate enforcement actions and conduct investigations related to IP theft.

Staples Loss Prevention and PayPal assisted in the investigation.

The case is being prosecuted by Assistant U.S. Attorney Christen A. Sproule.