Vendor: Many Ways to Meet NTIA’s DTV Converter Box Coupon Program

NTIA’s schedule “will work,” but it’s “very tight,” Archway said in the filing. The company provided Consumer Electronics Daily a copy with deletions of “proprietary” information. “Anything that can be done to accelerate the date for awarding the contract would be helpful in ensuring a smooth-running program,” Archway said. “This observation is based on our previous experience supporting similar coupon projects.”

A pillar in NTIA’s rulemaking -- running the coupon program with minimal waste, fraud and abuse -- is an Archway forte, the vendor said. Though no vendor can completely rule out a hack, Archway builds “substantial checks and balances into the system” to minimize the risk, it said. It cites its experience rebuilding the Iraqi Currency Exchange program for the U.S. Agency for International Development. Archway’s team helped eliminate counterfeit currency produced in Iraq using forged and stolen plates and removed Saddam Hussein’s image from the money supply, the vendor said.

Various coupon options are available, each with benefits and drawbacks, the filing said. For example, a debit card -- mailed to the consumer with the $40 subsidy loaded on it -- is the most cost-effective payment method, Archway said. The retailer is paid at the point of purchase and isn’t required to submit payment requests, reducing fulfillment costs, it said. Security features can be attached to the debit card, including serialization, expiration dates, personalization codes and holograms, it said. But debit cards are also somewhat “less secure” than other options, it said. For example, retail employees would be required to ensure the debit is being used for an eligible converter box, it said: “It’s possible the debit card could be used for other merchandise.”

Other vendors we polled said they disagreed with Archway’s estimate that a program of NTIA’s type ordinarily would take as long as 18 months to set up. But they called the timing hard to judge because little is known about what kind of coupons will be used, pending the outcome of NTIA’s rulemaking -- comments in which are due Mon. “For any of the companies bidding, how can we tell you what we're going to do when we don’t know what it is you want us to do?” said one vendor executive. A vendor also may have the one undeniably clever solution for running an economical coupon program with minimum waste, fraud and abuse, said the executive. But the company would be foolish to lay its cards on the table so early, he said.

There’s consensus among the vendors we canvassed that any instant coupon would be more vulnerable to fraud than other methods. “With the magnitude and visibility of this program, there are fraud rings out there that will try to retire on this program,” said one. Any paper coupon is “especially problematic,” depending on how it’s designed,” he said. Many counterfeiters at the consumer and the retail level are champing at the bit to get started, he said. “The Wal-Marts of the world aren’t going to seek redemptions for something they shouldn’t,” he said.

But crooked electronics stores in midtown Manhattan might be a different story. How do you stop an unsavory retailer from submitting 50,000 coupons for reimbursement? one vendor executive asked: “And what if Wal-Mart accepts a bunch of coupons that aren’t legitimate? An astute store clerk could be the last line of defense.”