Study Says Coupon Fraud is on the Rise 2020

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There is no doubt coupons can be a great way to save money while shopping for products both online and offline. Verily, whenever I am purchasing anything, I look for some good coupons that will cut a few dollars off the cost. With that said, fraudsters and scammers are ever looking for ways to benefit themselves at the expense of others. That’s why you will hear of coupon fraud.

Coupon Fraud 2020

Coupons are quite popular among consumers because we all want some juicy deals when making purchases.  This, in turn, compels businesses and retailers to use coupons often as a way of attracting many customers. It’s a technique that works wonders but also comes with its dark side that might bring down your business.

As an entrepreneur, do you know what coupon fraud is and how it might cost your business millions?  Can you identify any fake coupons and deals?  While there might be a small surge in sales, the fact that people are abusing coupons to benefit themselves will have immense repercussions on the business.  The majority of the retailers have adopted new ways to evade fraudsters such as changing coupon policies and availing only a few deals. In spite of this, the occurrences of coupon fraud are still on the rise.

So what exactly is coupon fraud and how did it all start? Remember, fraudsters are quite smart nowadays and they will always find new ways to trick retailers. Well, there are new tricks being used that are bound to cost retailers a whole lot of money.

Where it all started

Coupon fraud occurs in a variety of ways. In fact, fraudsters almost always have a new trick up their sleeves. It’s up to the retailers to keep their eyes wide open. Initially, paper coupons were the most susceptible to abuse.   In this case, consumers can photocopy coupons and use them multiple times rather than just for one-time single use.

promotional coupon fraud

This is not the only form of coupon fraud.  For instance, some individuals may use the discount for products or items that are not listed in the terms. Selling or buying coupons may seem like a harmless act but it’s actually swindling and very much illegal. Believe it or not, even paperless coupons are not fraud-proof. In fact, they are far from it and the fraudsters are only getting more sophisticated with their attacks. The rate of coupon fraud increased by a whopping 12% in 2019 alone according to a recent study.  From this, it’s easy to deduce that online couponing has not changed anything and the problem is pretty much still rampant.

When it comes to online coupon misuse, there is this one issue that stands out. Shoppers are now sharing their coupon codes with multiple other users all in the name of savvy shopping. In this case, when one user gets access to a coupon code, he or she shares it with several other friends and relatives. Keep in mind, coupons are usually intended for personal and single-use and not to be shared widely for all to use.

Did I mention fraudsters are getting more sophisticated in their manner of attack? Nowadays, it’s quite easy for them to alter coupons for their own payday. For instance, some fraudsters adjust the expiration dates, terms of use, and to some extent the barcodes.

Guess who covers all losses that will occur as a result. Unfortunately, it’s the business that suffers the most here and will have to deal with such losses. Coupon transactions involve a number of layers and this may be where the problem comes in. When one of the layers is vulnerable, the entire chain gets affected.

So is using a legitimate coupon issued by the retailer?

Legitimate coupons are always issued by the retailer. However, it’s the individuals or consumers who often find loopholes and ways to abuse the promotional codes. Consequently, retailers have to protect their businesses and companies against coupon abuse.

How fake coupons and deal sites are stealing your sales

There is a lot of online coupon fraud going on. However, some merchants don’t necessarily pay close attention to this issue. It’s easy to ignore fake coupons codes because to some extent they may not affect the bottom line.

As a matter of fact, fraudulent coupons are not often noticed by the merchants and can go on for some time before being noticed. With that said, even when the losses seem small and insignificant, they mount up to huge sums of money.  A recent report points out that in the US, coupon fraud costs businesses anything ranging from $300 to $600 million annually.

fake coupons and deal

So how exactly do the fraudulent coupons affect the sales of a business?  Frequent coupon abuse will considerably impact on your profit margin and eventually affect the bottom line. There are people who generate new promotional codes in bulk and sell them under the waters. This means the shoppers only have to register and create accounts to get access to the perks.  In this case, it’s the fraudsters who will be benefiting at the expense of your business.

Think of the fraudsters of manufacturing false coupon codes and distribute them to the consumers as valid. The main intent of the retailer is to get more customers by offering coupons that work. However, when the unsuspecting customers use fake coupons they will be left with nothing but a negative impression of the brand.

Consequently, the business will be gradually losing both its prospective and loyal customers. The end result is a decrease in sales and hence losses. This is how fake coupons ruin many brands and push away the majority of potential customers. According to This week in security News October 26th 2018 News, Small Businesses are struggling to prevent fraud which is already putting them down.

How to spot fake coupons

In recent times, using coupons to save money has become a global thing.  Take a look around you and it won’t take long to identify a high-end store that offers promotional codes to its customers. It’s now super easy to purchase almost anything ranging from groceries, jewelry, furniture, cosmetics, and even food in restaurants at a lower cost. Tesco is a recent victim of Coupon Code Scams. According to recent news, Tesco has to remove ClubCard’s offer after fraudsters guessed the codes.

spot fake coupons

With that said, there are very many fake coupons that are circulating around especially on the internet. The question is, how do you notice fake coupons?  Here is what you should watch out for;

Is it too good to be true?

Remember, if a coupon is too good to be true, it is probably fake. It makes very little sense for a store to offer 50% discount and above on its items. A huge amount of dollars is already spent on manufacturing and other aspects hence these costs have to be covered. Fake coupons will offer you products at half the original price.

Watch out for coupons that cost money

Coupons are not supposed to cost anything.  They are promotional codes that the stores offer to their loyal customers. It’s basically up to the user to take the offer or refuse it. Selling coupons is literally fraud. The person selling them has probably photocopied the original and wants to make extra money out of it. Avoid such people like a plague; they are scammers.

Don’t fall for coupons with free products

Coupons only offer discounts on items and not free products. If you come across coupons that include a free product it’s definitely bogus and a big scam. Mostly when you click on it, you are redirected to another page that asks for your personal details in exchange for the free items.

Free Products

Your personal details will then be exploited or used for illegal activities. This is a common practice especially now that the whole world is focusing on the Coronavirus pandemic. According to BBB, social media coupon scams continue to rise and spread amid the Covid-19 Pandemic.

Is there any link to the store’s website

Always keep this in mind; a legitimate coupon traces back to the store’s website.  This is actually one of the techniques the online stores use to keep out fraudsters and their fake coupons.  If a coupon is not linked to its original store’s website, then high chances are it’s a complete fake. Be wary of that!

Are there any expiry dates

All coupons have an expiration date. They are simply promotional offers that have a limited time frame just like sales. The coupons usually have an expiry date and once its due they can’t be used or found still available on the store website. Therefore, coupons that don’t have an expiry date are simply fake and fraudulent. Costco had to instruct the people to stop reposting a coupon code on November 2019 because it was fake and didn’t come with the expiry date.

The extremely short time span

It’s only natural that people will rush for a good deal that has a short time frame. Unfortunately, scammers know that too and take advantage of it.  Be wary of coupons with a super short time frame. This is probably a laid out trap by the scammers.

Forged coupons

Just by the look of it, you can differentiate a real coupon from a fake one. All businesses take advantage of coupons as a way to attract as many customers as they possibly can. For this reason, they make sure everything is done well and meticulously. Coupons are also a marketing strategy and you will find that a lot of attention is given to the design and other things such as the logo. On the other hand, coupons with blurry pictures and typo errors are typically forged. Watch out for that!

Barcode error

I had mentioned something to do with fraudsters adjusting barcodes in order to make money out of coupons.  Fake coupons either have unclear barcodes or some of the bars are missing. All legitimate coupons have crystal clear barcodes and there are no errors.

Shady payment methods

What sets apart the faux coupons from the legit ones is the payment methods. It’s typical of fraudsters to hide behind closed doors. They usually don’t want any of their illegal activities to be traced back to them. Thus they will try to dupe you into accepting discreet payment methods that can’t easily be linked to them. If you think the payment method seems fishy, take a U-turn and run! That’s definitely a fake coupon alert.

How do I prevent coupon fraud?

Aside from the fact that consumers have to be able to identify fake coupons, it’s the responsibility of merchants to prevent such occurrences. The first thing is to invest in security infrastructure that will work to track the coupon generation and redemption. The news released on Beyond Catching sender Proofing shows that there are a couple of ways to use AI to stop all forms of online Business Fraud.

prevent coupon fraud

You should be able to have real-time information on the redemptions, have the ability to restrict the coupon codes to only certain product categories, and set automatic triggers that will instantly notify you of abuse or takedown fake promo codes.

Another way of avoiding abuse and fraud is limiting the promo duration as well as the number of coupons available. For instance, there should be a maximum number of redemptions for each one of the available generic coupons. Also, any old codes should be completely deactivated.

Another effective technique is generating unique promotional codes.  This makes it easy to control them because each unique code can only be used by one individual. After it has already been used, your monitoring system will automatically deactivate it.

Additionally, keep a close eye on your distribution channels. How are the customers getting the coupons? Social media is a good platform for marketing your deals but there are potential risks.  Scammers are also using social media to circulate their own fraudulent coupon codes. If you are marketing through social media, make sure your page is verified so that consumers can identify the real deals.

Conclusion

Fake coupons will do your business more harm than good.  It important for retailers to adopt ways to completely limit coupon fraud and also prevent consumers from abusing them whenever there is a promotion. This way everyone benefits.

Remember coupons and special deals can increase the sales of business and boost profits. But without well thought out strategies, great losses are likely to occur. Don’t be fooled by the initial spike in sales and traffic. Over time, it will all come back to haunt you and considerably impact the business bottom line.

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