Disney mails resolution to coupon gaffe

After discovering that shoppers were reusing one-time only coupons, Disney is now asking 13,000 online customers to send in a paper coupon to prove they have a right to a discount.

Unable to figure out which of its customers legitimately used a discount certificate on its Web store earlier this month, Walt Disney is asking 13,000 people to simply mail in their coupons.

In an e-mail message sent late last week to customers who placed an order using the $15 coupon, Disney said the gift certificate was meant only for people who had bought goods at its stores during a promotion earlier this year. Those shoppers were sent or given a paper coupon. In the message, Disney said it would cancel customers' coupon-related orders on Nov. 23 if it hadn't received their physical coupons by then.

"Upon receipt and verification of the (coupon), we will release your order and credit your account for any applicable discounts," Disney said in the note. "We apologize for any inconvenience that this may cause."

The move was Disney's latest response to a coupon goof made earlier this month. In August and September, the company gave out a $15 coupon to people who spent $65 or more in its physical stores or on orders made over the phone or through its Web store, DisneyStore.com. The terms of the coupon, which became active Nov. 1, stated it could only be used once. However, the company took no initial technical steps to prevent shoppers from using a coupon code many times or from passing it on to friends.

Instead, the company used just two different codes--one for coupons issued in physical stores and the other for coupons sent out following phone or Internet orders. One of the codes--on the Web and phone coupon--was simply "HOLIDAY." When shoppers placed orders using one of the two codes, Disney did not verify whether they had legitimately received a coupon.

For the first several days of November, DisneyStore.com was flooded with orders linked to the coupons from people who had found the codes on shopping discussion sites such FatWallet.com and DVD Talk. Disney has said that the coupon caused its order volume to swell to four times its normal size.

After discovering that many of those shoppers were not using the coupon codes legitimately, Disney placed a notice on its Web store saying customers had to mail in a physical coupon in order to get the $15 discount. But by then, thousands of discount-related orders had already been placed on the site.

At first, Disney said it would not ask customers to send in a coupon if they had placed their order before the notice was posted. Originally, the conditions of the discount did not require customers to mail the cards to Disney for redemption. Instead, shoppers were told to submit the HOLIDAY code or the other coupon code at the Disney store site.

However, the company has decided to now ask all customers to send in the physical coupon. Without the coupon, Disney couldn't determine whether they had actually received it, said company spokesman Gary Foster in explanation of the policy switch.

"It was really the only way to verify that they had received a legitimate coupon," Foster said.

Disney has not yet shipped out any orders placed using the coupon codes, but it will do so as soon as it starts receiving physical coupons, he said.

Unhappy shoppers
Disney's response upset many shoppers who tried to place orders using the coupon code.

Kimberly Sliefert, for instance, is a member of the Disney movie club who considers herself a loyal Disney customer. But no more. Following the coupon fiasco, Sliefert, a Surprise, Ariz., resident, says she'll boycott Disney.

Sliefert placed nine orders for sweatshirts and children's pajamas through DisneyStore.com and over the phone using the HOLIDAY code coupon. The initial total for all nine orders was about $45, or a little more than a third of what the normal total would be.

Sliefert, who received the coupon code from a friend, said she understood Disney might not want to sell the goods to her for that discounted amount. However, Disney's customer service representatives did not tell her there was a problem when she phoned in her orders, she said.

Because she feels she placed the orders in good faith--she didn't know she had to have the physical coupon to qualify for the offer--Sliefert said the company should have given her a significant discount. Instead, the company offered her less than 10 percent in discount, and she cancelled her orders in response.

"I know that they don't have a legal obligation to give me stuff for free," Sliefert said. "But Disney failed miserably in handling this."

Likewise, Irvine, Calif., resident Suzi Cassidy said she would avoid Disney in the future because of the coupon flap. Cassidy placed an order for clothing after finding a coupon code on iVillage's ParentsPlace.com message board.

Cassidy said she called to confirm her order the day after it was made and was told by a Disney customer service representative that there would be no problem with her receiving the discount. In view of this, Disney should honor the price it quoted her on its Web site and over the phone, she said.

Cassidy said Disney should have come up with a better system of dealing with the coupon glitch.

"Having the word "holiday"...I think most people would share that innocently with a friend or a neighbor," she said. "It makes Disney look like they don't know what they are doing. The promotion wasn't well-thought-out to begin with."

Disney is the latest company to fall victim to Internet shoppers trying to exploit a pricing glitch or a poorly designed coupon campaign. Last year, Spiegel customers repeatedly used codes from supposedly one-time-use coupons to order products from the catalog company. After shipping some products before catching the problem, the company charged some customers for the discounts they received and threatened to never let them order from it again.

Similar problems have hit online stores such as Macys.com, Buy.com, Staples.com and eZiba. However, most of those stores caught their coupon problem before they shipped products. Instead, most simply canceled the illegitimate orders.

Disney's Foster acknowledged that the coupon offer could have been designed better.

"We've learned our lesson," he said.

Not everyone was planning to boycott Disney over the coupon mix-up. Don Chan, for instance, tried to place separate orders for two gift cards and a DVD using the coupon code. Although he feels like Disney should honor the discount on his DVD order, he won't be too frustrated if it doesn't, said Chan, a Southern California resident.

"I do think it's a poor response by Disney in how they handled it," Chan said. But he added, "If I didn't get the deal, I'll just go on to the next one."