CoolSavings Alerts Grocery, Drug & Mass Retailers: Exercise Caution When Accepting ``Free Product'' Coupons; Popular Targets for Coupon Fraud Hurting the Industry and Consumers.

Business Editors

CHICAGO--(BUSINESS WIRE)--Aug. 26, 2003

CoolSavings, Inc. (OTCBB:CSAV), an online direct marketing and media company and the leading provider of secure, online printable coupons, is alerting retail stores across the country who accept manufacturer coupons to exercise caution when accepting "free product" or high value coupons.

This action comes in the wake of a limited number of incidences of coupon fraud in which a small number of coupon scammers have fraudulently reproduced or manipulated coupons that were originally distributed through direct mail and Sunday newspapers, mostly for free product and high-value offers, and attempted to redeem them at retail stores. Because the scammers sold the fraudulent coupons on eBay and other Internet auction sites, a few retailers have erroneously labeled the fraudulent coupons as "Internet coupons" and ceased the acceptance of all "computer-generated" coupons at their stores, including legitimate, online printable coupons distributed by reputable companies such as CoolSavings on behalf of consumer packaged goods manufacturers.

"The problem is not coupons printed from the Internet. Six years of experience tells us that Internet coupons are actually less prone to misredemption than coupons distributed through the newspaper and direct mail," says Mathew Moog, president and CEO of CoolSavings, Inc. "The real problem is `free product' coupons that were originally distributed via offline methods and then illegally scanned and sold. These types of coupons are an extremely popular target for fraud by scammers. Therefore, CoolSavings urges retailers to scrutinize all free product coupons--regardless of the format--rather than banning the acceptance of legitimate, online printable coupons."

CoolSavings is actively working with major retailers, manufacturers and the appropriate trade associations to develop new standards that will apply to the acceptance of `free product' coupons.

Commented Moog, "CoolSavings will not use the Internet to distribute printable `free product' coupons, and we discourage other providers and marketers from doing so. Retailers and manufacturers must realize that the popularity of home scanners and auction sites makes `free product' coupons a more risky promotional tactic than has historically been the case."

By far the largest distributor of coupons printed from the Internet, CoolSavings has developed proven technology, security procedures and best practices that contribute to making the Company's coupons less prone to misredemption than traditionally distributed offline coupons. Every coupon that CoolSavings distributes is encoded with a unique serial number and special bar code, a feature that is not available in other channels of distribution. The unique bar code helps manufacturers and retailers track redemption by product, by store and by household. CoolSavings also leverages its patented technology to print the household name (e.g. "The Smith Household") on the face of each coupon to allow the cashier to match the name on the coupon to the shopper. In addition, CoolSavings includes a watermark of its famous piggybank icon that disappears when photocopied. These measures, along with CoolSavings' stated policy to not distribute "free product" coupons, make it simple for retailers to recognize CoolSavings coupons and accept them.

Research shows that online printable coupons are a part of America's shopping culture. Forrester Research reported that consumers downloaded 240 million grocery coupons in 2002. Forrester also found that more than 38% of U.S. online households have used Internet coupons. Well-known and respected manufacturers such as General Mills, Kellogg's, Unilever, PepsiCo, Hormel, Bristol-Myers Squibb and Johnson & Johnson are actively employing online printable coupons as a part of their successful marketing mix.

Research also indicates online printable coupons are safer than coupons distributed through other vehicles. A recent study by CMS concluded that Internet coupons were seven times less likely to be misredeemed than the dominant coupon vehicle, Free Standing Inserts, which are distributed through the newspaper. NCH and CMS report that average fraud rates for traditional coupons range from 10-25%, costing hundreds of millions of dollars per year.

"The recent fraud incidents are isolated but unfortunate because they hurt the 99.9% of consumers who legitimately use online printable coupons to save money on their favorite brands," says Moog. "Given the popularity and low incidents of fraud of online printable coupon fraud, retailers that choose not to accept them risk alienating customers who are complying with the law and taking advantage of legitimate offers from manufacturers of their favorite brands and products. In addition, these consumers are proven on average to spend 30% more money on groceries per week than offline coupon users."(1)

Simultaneous to its effort to educate retailers, CoolSavings is working with manufacturers to improve technological safeguards to further reduce fraud, and to strongly encourage manufacturers to curtail their use of free coupons. Since 1997, CoolSavings has worked with more than 100 consumer packaged goods brands to deliver promotions via the Internet to nearly 30 million self-qualified consumers for redemption online and in stores around the U.S.

About CoolSavings

CoolSavings is an online direct marketing and media company that provides smarter solutions to help marketers reach their target consumers. Combining a broad distribution network, sophisticated analytics and proprietary technology, CoolSavings enables a wide variety of advertisers to identify and engage their best customers using highly targeted services such as printable couponing, lead generation, e-mail, category newsletters, direct mail and product sampling. CoolSavings' popular consumer savings destination, coolsavings.com, is ranked the #1 coupon site on the Internet by Nielsen NetRatings.(2) As of June 2003, more than 28 million U.S. households have registered with the CoolSavings service, with nearly 12 million users active in the last 12 months.

(1) NFO WorldGroup, CoolSavings "U.S. Coupon Trends", 2002

(2) Neilson/NetRatings, May 2003.

CoolSavings is a registered trademark of CoolSavings, Inc. Other product and company names herein may be trademarks of their respective owners.

Cautionary Note Regarding Forward-Looking Statements 

Statements in this press release regarding CoolSavings' business that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including the statements under "Business Outlook" and other statements regarding the Company's expectations, beliefs, hopes, intentions or strategies. Where possible, such forward-looking statements have been identified by use of words such as "project", "target," "forecast," "believe," "expects," and similar expressions. Known and unknown risks, uncertainties and other factors, both general and specific to the matters discussed in this press release, may cause CoolSavings' actual results and performance to differ materially from the future results and performance expressed in, or implied by, such forward-looking statements. These risks, uncertainties, and other factors include, without limitation, the Company's ability to obtain additional debt and/or equity financing, the uncertainties related to CoolSavings' unproven business model in a rapidly evolving marketplace, and CoolSavings' ability to protect its patents, trademarks and propriety rights. For further discussion of some of the risks, uncertainties and other factors which could cause actual results and performance to differ from those expressed in, or implied by, the forward-looking statements, see "Risk Factors" in CoolSavings' Form 10-K for the year ended December 31, 2002, as filed with the SEC. Except as expressly required by the federal securities laws, CoolSavings undertakes no obligation to update or revise any forward-looking statements as a result of new information, future events or developments, changed circumstances, or any other reason.