Homemade counterfeit coupons have begun circulating at an alarming rate on the Internet, turning up through auction services, emails and on message boards and through other methods.

Counterfeit e-coupons are appearing with increased frequency

The number of fraudulent types of coupons increased more than four-fold just during the month of June, from 12 to more than 50, according to Bud Miller, executive director of The Coupon Information Center (CIC) in Alexandria, VA.

Counterfeit e-coupons had been identified as a "significant" problem by last December and have picked up speed every since. The coupons cover a wide variety of brands and involve mostly free product offers.

"The problem is there are new ones appearing literally everyday," he said.

One coupon offers a free 12-pack of any Pepsi product with a maximum value of $4.50. The coupon expires Dec. 30.

Bart Casabona, a spokesperson for Pepsi-Cola North America, says the soft drink giant has no connections to the coupons and plans to take appropriate action.

"We're looking into it as we would with any usage of our trademark or brand," he said.

Perpetrators have found their way around safeguards to prevent counterfeiting by diverting coupons from home printers to the disc drives on home computers where they can be easily passed around. The method has been posted on the Internet on underground bulletin boards for others to follow, Miller said.

"This is a new problem," Miller said. "It's going to be a major headache for the industry."

Victims include retailers and manufacturers as well as innocent consumers purchasing counterfeit coupons. One eBay auctioneer has already been the subject of litigation for hawking fake coupons. That case was settled out of court, but others are under investigation and likely to be prosecuted, Miller said.

He said the extent of the financial losses are only beginning to emerge but will likely prove substantial. In some cases, individuals are redeeming hundreds of dollars worth of free products.

Circulating counterfeit coupons is a criminal offense that can be prosecuted by federal, state or local law enforcement, according to the CIC.

A partial list of counterfeit "free product" coupons has been identified by the National Grocers Association, Arlington, VA. Brands include:

Salon Selectives Hair Products; Entenmann's Products; Reynolds Aluminum Wrap; Mott's Apple Sauce Six Pack; Haagen Dazs IceCream; Planter's Nuts; Electrasol; Tropicana Products up to $6.00 off; Thomas Toast R Cakes Coupons; Dove Body Wash/Bars up to $6.99; Pepsi 12 Pack; Scott's Tissue; Speedstick Deodorant for Women/Men; Birds Eye Veggies; StarKist Tuna; Mountain Dew Live Wire 12 pack; M&M's Candy; Frito-Lays and Ragu Spaghetti Sauce.