The dark web has become notorious for the sale of drugs, stolen financial data, and even guns, but in their latest crackdown, the feds are dragging another unlikely cash cow of the contraband underground into the spotlight: counterfeit coupons. For one fraudster, those fakes were good for tens of millions of dollars worth of every consumer product from kitty litter to Clif bars to condoms.
On Thursday, the FBI indicted 30-year old Beauregard Wattigney, a Louisiana-based technician for ITT Technical Institute, on charges of wire fraud and trademark counterfeiting on the Dark Web marketplaces Silk Road and Silk Road 2. More specifically, Wattigney is accused of being the online coupon kingpin known as ThePurpleLotus or TheGoldenLotus, a figure who sold packages of coupons for virtually every consumer product imaginable including alcohol, cigarettes, cleaning supplies, beauty products, video games, and consumer electronics. The spoofed coupons---in most cases offering discounts just as effective as the real thing---were offered in packages that cost customers around $25 in bitcoin, but offered hundreds of dollars in total fraudulent discounts.
The FBI accuses Wattigney of doing $1 million in total damage to the affected companies---which range from Sony to Crest to Kraft. But Jane Beauchamp, president of the fraud consultancy Brand Technologies, says she's been tracking ThePurpleLotus for more than a year on the Dark Web, and assesses the damages to be "significantly" higher. “I’d estimate that the consumer packaged goods industry experienced tens of millions of dollars of counterfeit coupon damages,” from just ThePurpleLotus’s sales, Beauchamp says.
“We have the best, most consistent, most precise, most scannable, most accepted, most diverse collection of coupons anywhere. They are not on anyone's ban list. They are not blacklisted anywhere,” reads PurpleLotus’s vendor profile on Agora, the largest currently active black market on the Dark Web. “They will save you a ton of money...If you use the coupons for the everyday things that you normally buy, the golden goose will continue to lay golden eggs.”
In addition to those packages of pre-made coupons, ThePurpleLotus also offered a $200 package of “coupon-making lessons.” That digital guide to counterfeiting included a powerpoint presentation showing the step-by-step process of coupon fraud, from generating bar codes to copying legitimate-looking logos and watermarks. In an accompanying video, set to a tasteful soundtrack of Bach piano compositions, he demonstrates the technique on screen.
https://www.youtube.com/watch?v=t5jdJPe04B8&feature
In his tutorials, ThePurpleLotus explained the simple breakdown of barcode creation using the increasingly universal GS1 standard: GS1 codes begin with a “company prefix” that can be copied from any of the company’s products. The next six digits are the “offer code,” which can be any random number for a counterfeit coupon, followed by the savings amount listed in cents and the required number of item purchases necessary to receive the discount. “You can be up and running and making coupons in an hour,” PurpleLotus's guide reads. “The more you make the faster you get...You are a coupon ninja if you can make one in under two minutes.”