10 Easy Ways to Fight Coupon Fraud
Jul 18, 2022
4 minutes to read
So, what’s the problem?
Coupon security is an ever-pressing issue for businesses wanting to increase their return on investment in sales promotion campaigns.
Coupon fraud has moved from the realms of print rooms and persuasion techniques to the exploitation of bugs, poor programming and password cracking software. If you need a secure password generator we have something for you.
By 2019 there will be 1.05 billion digital coupon users and by 2022 digital coupon redemption is projected to rise by 94%. -Juniper Research
In large enterprises, the potential losses can be astronomical and with such large amounts of coupon users and coupons being redeemed digitally, the need to to take preventative measures against coupon fraud and coupon abuse is greater than ever.
Ok then. Let’s improve your security.
We’ve put together a list of some of the most important changes you can make to your promotion infrastructure and coupon generation process to help you combat this problem.
1. Track your Coupon’s status
Let’s start simple. Tracking coupons needs to be possible for instant customer support and troubleshooting. With decent tracking software, you should be able to view the following:
The current status of your coupons
Usage amount (if more than 1 redemption is possible)
Which campaign or batch your coupons are in
The timeframe that coupons are valid
Any custom attribute assignments
Customer ID assignment
2. Control the distribution of your coupons
Your method of distribution must be moderated and controlled by your employees so you know exactly how your coupons are being used at all times.
It doesn’t matter if it’s on your own app or platform, using coupon wallets to allow your customers to store their e-coupons, or in combination with 3rd party tool integrations such as Braze or Mailchimp to deliver coupons directly to customer inboxes. Either way you and your team have to be the ones controlling the delivery.
3. Set overall campaign budgets
To prevent any possibility of overspending you should always have budget limits on coupon campaigns so they end automatically, without any input from your developers or business team.
This can be based on either the overall campaign budget you have, or more specifically a limit on the total amount of coupon discounts that you give out.
4. Limit coupon redemptions
Just like budgets, you also want to limit the total coupon redemptions that can be made in a campaign, so that you don’t fall prey to coupon abuse.
Typically all coupons should be single-use, however, at times you might want to offer some of your premium or dissatisfied clients more redemptions. In this case, setting a campaign coupon redemption limit is a good idea to have an automatic failsafe.
5. Customize code generation
There are a number of different ways that you can customize your code generation.
Of course, randomly generated codes will reduce the amount of times that coupon abusers could make an educated guess at your coupon code.
Using prefixes and suffixes allows you to set targeted attributes to batches of coupons, but they also allow you to create even more complex codes. This is not ideal if your customers have to type the entire code into a field though.
6. Use Geolocation attributes with Coupons
Applying postcode, city or country data to coupons is an important part of tracking and analyzing where redemptions are made, so you know when campaigns don’t go to plan and if you need to use different targeting methods to get new prospects interested.
A very helpful tool to help limit the spread of coupon is a geofencing software. By drawing geofences around areas on the map you would like your coupons to be redeemed, or not redeemed in some cases.
7. Limit cart abandonment rewards
A simple trick fraudsters will take advantage of if you let them is going to the cart and leaving without paying to get the cart abandonment coupon every time.
Arguably this is more of a life-hack than it is malicious fraud, but it’s something you can protect yourself against by only rewarding customers on their first purchase, or setting specific conditions that must be met before a cart abandonment becomes available.
If you’re interested in finding out more about setting these conditions up, you can get a quick demo of our software by clicking the book a demo button anywhere on the website.
8. Assign validation data to Coupons
You should already be setting up your coupons attributes so they only become valid after specific conditions are met.
Setting clearly defined Profile, Device or Payment data as conditions for validation can help you track who is cashing-in your coupon codes, as well as where and when they’re being redeemed.
9. Test your campaigns in a staging environment
One of the best ways you can stop silly accidents from happening is by making sure to test all of your campaigns in ‘sandbox’ mode.
A staging environment allows you to check for any potential weaknesses your coupons will have, and make coupons with testing codes like ‘TEST-123’ unavailable to the general public and even your employees, which can unfortunately be a problem too.
10. Limit access to your promotion system
Accountability is very important in cases of in-company fraud and genuine mistakes in deployment.
You must always clearly define user-roles among your team and deployment should get the go-ahead from higher level staff. Always ask yourself: Who should have access to your promotion system. What should people see?
There are a lot of different techniques you can implement to effectively combat coupon fraud and coupon abuse. But it’s often difficult to get your developers to find the time to program, manage and maintain it all while they’re working on their core product.
The simplest solution is to outsource promotional infrastructure in the same way you would with CRMs, Management tools and Analytics.
If you’d like to make an informed decision about whether you’d benefit more from building or buying the software needed to protect your business, the best way is to fill out a short form and book a quick demo with us and learn more about Talon.One’s Promotion Engine features and capabilities.
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