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  The ILCC Legal Division

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Consumer Coupons and Rebates

I. Purpose

To set the policy of the Illinois Liquor Control Commission and establish the procedures whereby coupons/rebates may be provided by manufacturers, distributors and importing distributors to consumers through retail licensees.

II. Policy

It is the policy of this Commission that coupons/rebates may be given to consumers so long as such promotions are offered to similarly situated retailers offering off-premise sales in the manufacturer’s, distributor’s or importing distributor’s geographical areas; on a non-discriminatory basis, in direct relation to the amount of product purchased.

III. Background

Section 5/6-5 of the Illinois Liquor Control Act and this Commission’s Trade Practice Policy TPP-1 on the “Of Value” Standard are incorporated herein by reference. The usual manner in which manufacturers, distributors, and importing distributors provide consumer rebates or refunds involves the use of coupons. There are two general types of coupons: “mail-in” coupons, also known as “rebate/redemption” coupons, and “cash register” coupons, also known as “instant refund” coupons. To use the “mail-in” the consumer purchases the product for full price from the retailer and then mails the coupon to the manufacturer, distributor or importing distributor, with proof of purchase. The manufacturer, distributor, importing distributor or a designated third-party mails a rebate check directly to the consumer. To use the “cash register” coupon the consumer presents the coupon to the retailer and receives an immediate reduction in the purchase price from the retailer. The retailer forwards the coupon to the manufacturer, distributor or importing distributor, or its third-party agent, which directly reimburses the retailer for the value of the coupon.

Generally, the coupon is an acceptable method of brand promotion, however, such promotion must be done in such a manner so that unfair financial advantage is not given to any similarly situated retailer or group of retailers in a geographical area. Providing an unfair financial advantage or distributing the coupons in a discriminatory manner would allow the retailer using the coupons to receive something “of value” over retailers which had not been provided with the coupons, since customers would generally prefer to purchase an identical brand from the retailer with coupons, resulting in a price saving to the consumer. Manufacturers, distributors and importing distributors must provide similarly situated retailers purchasing product with coupons in relation to the quantity purchased. Thus, one retailer cannot receive a disproportionate number of coupons per case of product, while others receive fewer per case. The practice of unequal distribution shall be considered a discriminatory discounting program by this Commission. The Commission does recognize quantity pricing schemes as between on-and-off premise establishments, and such a distinction will be applied to retail coupon programs.

IV. Procedure

Due to the potential for abuse, including fraud, the redemption of coupons without actual purchase of product, and other “of value” situations, the use of the “point-of-sale instant refund” coupon is not allowed.

Manufacturers, distributors and importing distributors may conduct coupon programs as follows:

  1. The program must be through the manufacturer, distributor, importing distributor or a third party, usually a clearinghouse; no retailer redemption shall be allowed.
  2. “Mail-in” coupons shall require proof of purchase with a dated, retail-specific receipt.
  3. “Instant “ coupons shall be reimbursed to the retailer only with substantiation through documentation that there has been sufficient purchase of product to warrant the reimbursement.
  4. Coupons cannot be retailer specific.
  5. Coupons may be available in print media (newspapers, magazines etc.) but not by direct mail.
  6. Coupons may be available only to adults 21 years of age or older.
  7. No purchase requirements may be imposed.
  8. Coupons must contain an expiration date.
  9. Commission’s rules and regulations prohibiting the giving away of alcoholic liquor for a commercial purpose or in connection with the sale of non-alcoholic products or to promote the sale of non-alcoholic products shall apply. (Regulation 100.280).
  10. Coupons must be made available to all similarly situated retailers in similarly situated marketplaces in the distributors designated geographical area.

The Commission realizes that certain larger retailers may wish to have a uniform coupon/rebate program which is regional, state-or-nation-wide. While the Commission does not wish to dictate whether such business practices are undertaken by any retail licensee, it recognizes that certain "of value” situations may come into play with such programs, and mandatory memberships, enrollments, or monthly fees may exclude some or all suppliers from participation (Section 5/6-5 and 5/6-6).

Coupon programs for a specific retail licensee are allowable on the following additional bases:

  1. Manufacturer, distributor, and importing distributor coupons may appear in retailer-specific promotional advertisements, however, the coupons must be capable of being redeemed at any retailer.
  2. The program may not be compulsory; if manufacturers, distributors or importing distributors wish to use the retailer system, or the system of the third-party’s with which the retailer has contracted, such participation must be on a voluntary basis.
  3. Failure of a manufacturer, distributor or importing distributor to participate in the third-party’s retailer program shall not preclude such manufacturer, distributor or importing distributor from offering its own coupon program at said retailer’s premise.
  4. Any booklets, leaflets, or other literature containing the manufacturer’s, distributor’s or importing distributor’s products, and describing or promoting the coupon/rebate program shall not be retailer specific. This requirement does not prohibit retailer specific advertisements, flyers or circulars which are paid for by the retailer, and which advertise, promote or contain the retailer’s coupon or rebate for a particular manufacturer’s, distributor’s or importing distributor’s alcoholic liquor products.
  5. All checks in reimbursement for coupons shall not be retailer specific, nor shall any such checks which are sent to or to be used by consumers, be redeemable only at such retailer’s place of business.
  6. Although coupons may combine the purchase of alcoholic products with other products, such programs may not require that the other items be individual retailers specific, so that the purchase of an alcoholic product which would entitle the purchaser to a specific non-alcoholic items involves items found only at one retailer would operate as an exclusion of other retailers, and would be the giving of something “of value” to such retailer.

Section 5/6-5 and 5/6-6 of the Liquor Control Act should be consulted for “of value” signage and inside advertising material limitations.

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