Tuesday, November 1, 2016

Why Target Lowers Coupon Values

Lately we have seen a lot of new changes at Target with their coupon policy.  We will try to explain one of them here for you.

The biggest change to Target's coupon policy has been with the update of their new system.  You have probably noticed, or heard about, how Target is lowering the value of manufacturer's coupons.  They have always done this when the price of a coupon is worth more than the product itself (if you use a $3 coupon to buy a $2 product, you do not get the overage).  However, they have also started doing that with items that generate a gift card as well.  This has been upsetting to a lot of people, but we want to explain why.

Before these changes, this is how a breakdown would work.  Let's say there was a sale on lotion, where if you bought three bottles, you got a $10 gift card.
  • Buy six bottles of lotion for $5 each ($30)
  • Use three $5/2 coupons ($15)
  • Pay $15 and get back $20 in gift cards, which would make this a $5 moneymaker!
The problem lies with return policies.  When Target gives free gift cards, it changes the "return value" of the item.  Let's say you wanted to return the lotion because you didn't like how they smelled.  You would KEEP your gift cards, but the $20 would be divided up between the six bottles.  Instead of each bottle being worth $5, it would be worth $5 - $3.33 = $1.67.

Let's also talk about what a coupon is:  it is NOT a discount, but it is a form of payment.  It works a bit like a check from the manufacturer.  So because Target would still be submitting your coupons to be reimbursed from the manufacturer, they are required to refund the amount of money you paid PLUS the coupon value.

Therefore, if you took these six bottles back, you would be given back $1.67 per bottle (so $10) AND the $15 in coupons.  Therefore you just got $25 in cash AND a $20 gift card ($45 value), but you ONLY paid $15 in cash and paid $15 in coupons (so $30 total) in the first place.  Do you see the problem here?  The value of the coupons and the value of the gift card was making it so that people EARNED money by purchasing and then returning because the value of the coupons was MORE than the return value of the product itself.

Here is how the NEW policy works:
  • Buy six bottles of lotion for $5 each ($30)
  • You will get a $20 gift card, making the six bottles worth $10, or have a return value of $1.67 each, or $3.33 per set of two.
  • Your $5/2 coupons will be adjusted down to $3.33/2 coupons so that they are equal to the RETURN value of the product, not the SELL value of the product
  • You will pay $20 ($30 - $10 in adjusted coupons) and then get a $20 gift card
This makes what you pay balance out with the gift card.  This way, if you go to return the items, you would get back $1.67 for each bottle (the return value) for $10 total, plus the $10 worth of coupons ($20) AND keep the $20 gift card, making the overall value $40 instead of $45.

Confused?  Yeah, we kind of are, too.  We reached out to Target to try to make sure we were doing this correctly and to get additional clarification, but all they said was to see the Coupon Policy on their website (which does NOT explain this at all)!

Unfortunately, whether we agree with it or not, this is Target's new policy.  Be prepared to only have moneymakers at Target with rebate apps.  This makes apps like Ibotta, Checkout51, and Mobisave that much more valuable!


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