Coupon fraud can be difficult to detect and prevent. The main reason for this is that it can be a challenge to determine whether a person doing it is making an honest mistake, or is deliberately trying to defraud a company.
To cut down on the guesswork, here are some coupon fraud prevention techniques.
1. Emphasize education and communication regarding coupon fraud
A good starting point for a business wanting to stop coupon fraud is to educate its employees – especially its Trust & Safety team – on how to both recognize and report coupon fraud. Some common signs that a coupon may be fraudulent include:
- Its barcode appears to be modified, or is missing
- It’s for a “free” item, or worth more than the price of the item it’s discounting
- It doesn’t require the user to purchase anything in order to redeem it
- It doesn’t have any terms or conditions associated with it
- The user had to purchase it from someone
If a business can identify a pattern of coupon fraud, there are several organizations it can contact to investigate, depending on what it believes the scale of the fraud to be. These include:
2. Limit the number of times coupons can be redeemed
Coupons should always have a limit on the number of times they can be redeemed by the same customer. So there should be some sort of quick identity verification process (usually email address or phone number) involved in using a coupon, so a customer doesn’t double-dip.
It can also be useful to place a cap on the total number of times a coupon can be redeemed. This helps not only to stay within the advertising budget but also to deter fraudsters from abusively redeeming offers over and over again.
3. Place additional conditions on the use of the coupon
The fewer restrictions on how a coupon can be used, the more vulnerable it is to abuse. Consider adding conditions such as requiring a minimum purchase before the coupon can be used.
Or, in addition to the expiry date, specify a time-of-day window in which the coupon is valid. Another option is to place a geographic restriction – using IP addresses for digital coupons – on where a coupon can be used, to limit legitimate uses to areas actually close to a business.
4. Limit the number of partners used to distribute coupons
Deciding how many other companies to allow to distribute coupons is a balancing act. On one hand, more distribution partners means wider reach. On the other hand, it also means a greater risk of fraud if a partner doesn’t do its part to distribute the coupons securely.
5. Invest in advanced printing technology for physical coupons
If a business deals in physical coupons, there are new printing technologies that make them more difficult to counterfeit. These include microprinting, watermarks, and specific color combinations.
They also include next-generation barcodes that are more difficult to decode, can void the coupon immediately after it’s used, require smartphone verification, and more. Consider using this technology on coupons that offer free items or heavy discounts on high-priced items.
6. Use random or custom digital coupon codes
A common mistake when making digital coupon codes is to represent them with easy-to-guess phrases. Codes like “10PCTOFF” are vulnerable to being brute-force guessed by scraper robots used by fraudsters to find and abuse coupons. Instead, randomize codes, and try to vary their length as well. You can also generate a unique code for each customer you send an offer to.
7. Monitor and gatekeep web traffic regarding the use of coupons
Configure website settings to allow robots from search engines (as this will help with exposure), but don’t allow any other robots. Also consider setting up a robot challenge (i.e. reCAPTCHA) for pages where users can input or submit information, to deter robots from rapidly creating accounts to abuse offers.
In addition, use software that monitors web traffic and uses behavioral analytics to check for activity where fraudsters may be attempting to abuse coupons. An example might be an unusually high number of coupons redeemed in a short amount of time.
8. Place limits on cart abandonment rewards
Another way people abuse digital coupons is to put items in their shopping cart, then leave the website and wait until they are emailed a discount coupon enticing them to return and complete their purchase. Consider reserving these types of coupons for first-time shoppers, or setting other specific conditions on when cart abandonment coupons will be sent out.
FAQs
How to combat coupon fraud and abuse?
- Generate hard-to-crack codes. ...
- Limit the number of coupon redemptions. ...
- Control the coupon activity period. ...
- Assign unique codes to single customer profiles. ...
- Introduce budget limits. ...
- Use cart- and order-based coupon redemption criteria. ...
- Introduce email verification for digital offers.
Decoding: Intentionally applying coupons to the wrong products and pressuring cashiers to accept them. An example would be purchasing a different product/size than what is offered on the coupon. Mass printing/gang cut coupons: Printing coupons to use multiple times to redeem at different stores.
What happened to the coupon fraud ladies? ›
The three women faced multiple charges, including forgery, fraud, counterfeiting, and operating an illegal enterprise. Ramirez, the apparent ringleader, received the harshest sentence, serving two years in prison. Fountain and Johnson, on the other hand, received probation.
What are the consequences of coupon fraud? ›
Impact of Coupon Fraud
For businesses, coupon fraud can result in substantial financial loss, damage to brand reputation, and loss of customer trust. For consumers, coupon fraud can result in financial loss, as they may end up paying for counterfeit coupons that cannot be redeemed.
What are 2 bad things about using coupons? ›
The biggest con of using coupons is that they cost businesses money and may lead to lower profit for that sale. Another drawback is when existing customers wait for coupons, cannibalizing existing revenue before the coupon program.
How do people do extreme couponing? ›
The goal of extreme couponing is to combine manufacturer and store coupons with store sales to get items for free or for pennies on the dollar. You'll need to look through store circulars each week and look through your coupon inventory to match up sales.
Is extreme couponing illegal now? ›
Doing so is actually a form of counterfeiting and a punishable criminal offense. Any potential savings simply aren't worth the risk.
Is promo abuse fraud illegal? ›
Promo abuse is more frequently than not a type of purposeful friendly fraud – it isn't necessarily illegal. After all, abusers frequently exploit legislative gaps and inadequacies in digital security.
What does glitter mean in couponing? ›
Coupon Glittering is essentially the misuse of digital coupons. This can take many forms, but it typically involves using a coupon for a product other than the one it was intended for. This is often made possible by flaws in the coupon's coding, which fail to restrict its use to the intended product.
Can you go to jail for couponing? ›
One group of manufacturers said it lost $125,000 from fake coupons linked to Talens. In September, Talens was sentenced to 12 years in prison for “perpetrating a counterfeit coupon fraud scheme” that amounted to $32 million in losses for retailers and manufacturers, according to the Department of Justice.
Robin Ramirez, Marilyn Johnson, and Amiko "Amy" Fountain, were the real Queenpins. Ramirez was the ringleader who opened the Savvyshoppersite.com, the base site of their counterfeit operation. Ramirez started collecting grocery coupons in 2007 and sent them overseas.
How to coupon in 2024? ›
Where to Find Coupons. There are numerous sources for finding coupons in 2024. Look for them on websites like Ibotta, on product packaging or receipts, and in-store coupon inserts. Many stores also offer digital coupons that can be loaded onto your loyalty card for added convenience during your shopping trips.
How do you detect coupon fraud? ›
Always check the link of a coupon before using it. If the link does not direct you to the store's official website, the coupon is fraudulent. Pay close attention to the web address. The URL may appear legitimate, but if it ends in a series of random letters and numbers, you can assume that the coupon is fake.
Do stores lose money from extreme couponers? ›
Is extreme couponing stealing? No, extreme couponing is not stealing, but it's not uncommon for stores to resent it if a shopper brings in a stack of coupons and spends very little money in the end.
Is coupon glittering a crime? ›
Coupon fraud can take multiple forms, including counterfeiting coupons, altering valid coupons, and using coupons on products for which they are not intended (known as coupon glittering). Engaging in coupon fraud is illegal and can result in fines, imprisonment, and a criminal record.
Can you really save money couponing? ›
Couponing can save you money while shopping, but might cause you to spend more money, especially if you have trouble finding coupons for items you would normally buy or lose out on better deals from cheaper store brands.
Is it illegal to abuse coupons? ›
As a type of intentional coupon fraud, coupon glittering is illegal. It involves deliberately modifying and/or using a coupon in a way not allowed by its terms and conditions for undue financial or material gain.
Why are coupons effective at price discriminating? ›
Answer and Explanation:
Coupons essentially allow for price discrimination by having the customers self-select themselves. Customers who are not willing to pay as much will use the coupons and pay the lower price. However, those who are willing to pay more will not use the coupon and will pay the higher price.
Is extreme couponing a disorder? ›
There's a balance between how you spend your time and what you get out of that spend. Once again, the word "extreme" suggests that someone who coupons at that level has gone beyond the frugal mindset into obsessive-compulsive disorder land.
