Coupons are a staple in modern consumer culture, offering enticing discounts and deals while acting as a good means of customer acquisition. However, since its advent, the retail industry has battled with dealing with fake coupons.
As shown in the recent Netflix film, Queenpins, coupon fraud can cause multimillion-dollar losses. The recent report shows a 30% surge in coupon and discount fraud between 2022 and 2023 worldwide, ranking it among the top 5 fraud types in the retail industry.
If your business works with coupons, you must see how vulnerable it makes you. As this type of fraud shows no sign of stopping, you need to be equipped with the right knowledge and tools to combat it.
In this blog, you’ll learn more about coupon fraud, some of the telltale signs of a fraudulent coupon, and how technology can help your business take a stand against it. Read on!
What Is Coupon Fraud?
Coupon fraud is the illegal or dishonest act of using coupons in a manner that violates the terms and conditions set by the manufacturers or retailers. It is a threat to businesses that can result in significant financial and reputational losses.
Types of Coupon Fraud
With the advancements in technology, it is now easier than ever to create fake coupons. Let’s examine the different types of coupons you may come across.
Expired Coupon Redemption
Some individuals attempt to redeem coupons that have expired, either knowingly or unknowingly. If undetected, they can receive discounts on products they are not eligible for.
Copying Coupons
Copying coupons refers to the duplicating of physical or digital coupons to get unauthorized discounts against the regulations set by your business. This is done with scanners, printers, or photocopiers as well as various software like Photoshop.
Decoding Coupons
Decoding coupons involves unraveling the encrypted information in barcodes or QR codes to exploit loopholes or create fraudulent discounts using specialized software. This technique is used to manipulate coupon values, expiration dates, or product eligibility criteria.
Misredemption
Misredemption refers to when a coupon is used to purchase items that it was not intended for. This involves exploiting loopholes in redemption policies or using coupons for products not eligible for discount.
Coupon fraud takes shape in various forms, but what is the impact of fake coupons on your business as a whole? In the next section, we will explain why coupon fraud is such a big problem.
Why is Coupon Fraud a Problem?
If undetected, fake coupons can have long-term consequences on the health of your business. Here are some of the issues that often arise:
- Revenue Loss: Undetected coupon fraud leads to financial losses for businesses as retailers and manufacturers suffer revenue depletion from redeemed fraudulent coupons, impacting profit margins and hindering growth opportunities.
- Damage to Brand Reputation: Consumers can begin to associate your brand with fake coupons and coupon redemption issues. This damages your brand’s reputation, potentially leading to decreased customer loyalty and sales.
- Wasted Resources: Combatting fake coupons demands significant resources, necessitating thorough investigation and prevention efforts. Redeemed fake coupons leave no trace, complicating loss tracking and fostering internal investigations, dampening morale among your workforce.
- Impact on Legitimate Customers: Coupon fraud disrupts the shopping experience for legitimate customers, who may be faced with longer checkout times, limited availability of coupons, and price increases to offset financial losses.
- Marketing Efforts: Undetected fake coupons distort coupon redemption data, can affect ROI calculations, and lead to a misallocation of resources making it challenging for you to develop targeted marketing strategies and product offerings that resonate with your customer base.
The consequences of fake coupons are so wide-reaching that it’s hard to ignore. To begin tackling this issue, let’s dive into some red flags that can indicate a fake coupon
How to Spot a Fake Coupon?
In this section, will go into detail about some of the telltale signs you can check for when examining the authenticity of a coupon. Look out for:
- Unbelievable Discounts: If it’s too good to be true, it probably isn’t true. Authentic coupons typically offer realistic discounts that align with your previous campaigns.
- Poor Quality Printing: Poor printing quality is a big giveaway for fake coupons. Keep an eye out for blurry images, smudged text, or uneven borders. Legitimate coupons are usually professionally printed with clear, crisp graphics.
- Expiration Dates: Fake coupons are more likely to either not have an expiration date or one unusually far in the future or even unlimited validity.
- Inconsistent Branding: Authentic coupons typically feature consistent branding in terms of logos, fonts, and colors. If you notice inconsistencies in branding or design elements, it could be a sign that the coupon is fake.
- Missing Fine Print: Legitimate coupons usually have terms and conditions, such as limitations on usage or specific products eligible for the discount. A coupon with no fine print should be a red flag.
Some signs are obvious and are easy to spot after a quick visual examination. However, as fraud is becoming increasingly sophisticated, these less obvious signs are difficult, if not impossible, to detect with the naked eye.
The good news is that there are Intelligent Document Processing (IDP) solutions powered by advanced technologies, available to assist in detecting fake coupons. Klippa DocHorizon is one of those solution providers. Curious as to how we can help? Read on!
Spotting Fraudulent Coupons with Klippa DocHorizon
Klippa DocHorizon is our Intelligent Document Processing (IDP) solution that offers you the robust protection you need to combat fraudulent coupons. But how exactly does our technology detect coupon fraud?
Well, here’s a quick insight into the steps involved:
Step 1. Submit the coupon: You can scan the coupon with a mobile device scanning on location or your clients can submit a photo or scan of the coupon via a web or mobile application. Alternatively, it can be retrieved from a mailbox or cloud storage of your choice. We support 50+ integrations with tools such as Dropbox, Outlook, and Google Drive, for example.
Step 2. Coupon data extraction: With AI-powered Optical Character Recognition (OCR) integrated into our solution, all the visible information on the coupon is automatically extracted to be analyzed and verified.
Step 3. Fraud detection: The software processes the extracted data checking for fraud.
- It performs duplicate checks to see if the coupon that is submitted has been used previously.
- It verifies the validity of the submitted coupon based on redemption dates, products purchased, etc.
- It also performs document manipulation verification through metadata analysis to flag Photoshop manipulation, if the coupon is submitted digitally.
Step 4. Coupon verification: Is the coupon valid? If yes, the software will instantly forward the data for fast approval. Did it find signs of fraud or manipulation? If yes, the coupon will be flagged on the spot! The final output can be generated & forwarded in any machine-readable format like JSON, CSV, XML, etc that works with your internal system.
It’s as simple as that with DocHorizon! By embracing these measures, equip your organization with the right tools to properly combat coupon fraud and protect your business from fraudulent actors.
Ready to take this step? Book a demo below or contact us if you have any questions.