Subway Scraps Free-Sandwich Promotion

MILFORD, Conn. – The Subway restaurant chain said Thursday it is ending its decades-old free sandwich promotion, amid concerns that counterfeiters have been creating and selling copies of the restaurant's proof-of-purchase stamps and cards.

Subway, which operates more than 23,000 restaurants in 82 countries, joins a growing list of businesses — from pharmaceutical companies and cigarette manufacturers to recording studios and clothing designers — who say counterfeiters have hurt their bottom line.

Under the Sub Club promotion, which had run in some form since the 1980s, customers received a stamp for every six-inch sandwich they bought. A full card of eight stamps could be redeemed for a free sandwich.

But thousands of stamps are for sale at online auction sites and company officials said franchise owners were increasingly discovering counterfeit stamps.

"It's possible some of the stamps got by and we didn't even know," said company spokesman Kevin Kane. "It's possible we don't even know the extent of it."

Bud Miller, executive director of the Virginia-based Coupon Information Center (search), said coupon fraud exploded in 2003 as counterfeiters used high-quality printers and online auction sites to distribute millions of dollars in false coupons from companies across the country.

Grocers nationwide have struggled to spot fake coupons, which can be quite sophisticated or as simple as an altered expiration date. Some grocery stores have stopped accepting coupons printed from home after manufacturers refused to honor counterfeits.

Miller said the situation is improving because retailers are getting better at spotting counterfeits and federal agents are cracking down on sophisticated scams.

"Somebody doing one counterfeit is not going to bankrupt the system, but somebody doing thousands of these and e-mailing them out, that's where you get the problem."

In Missouri last year, FBI agents arrested a man who sold thousands of dollars worth of bogus Applebees gift certificates online. He received five months in prison.

The U.S. House of Representatives approved legislation last month that would strengthen anti-counterfeiting laws. The bill would require the destruction of equipment used to make counterfeit goods. Currently, pirated products are destroyed but the equipment is untouched, allowing more counterfeiting.

Subway is a privately held company, owned by Milford, Conn.-based Doctor's Associates Inc. (search). Company sales in 2003 were $6.8 billion.

The company is designing a promotion to replace the Sub Club cards. Each Subway restaurant can set its own timeframe, but the promotion will be phased out companywide by Oct. 1, Kane said. He said the company had been considering whether the promotion was outdated for some time.

When company officials discovered rolls of stamps available online, Kane said, it sealed the promotion's fate.

"All that effort and you're getting free subs," Kane said. "It wasn't a cruise. It wasn't a trip to the Bahamas. You're getting free subs."