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    Mistakes to Avoid When Combating Digital Coupon Fraud

    As distribution grows, so does fraud

    By John Karolefski

    There’s good news and bad news about digital coupons. More shoppers are redeeming them to manage their budget for grocery shopping, but unfortunately, more digital fraud is occurring at the same time. 

    Digital offers amount to a small part of overall coupon distribution and redemption, which is dominated by FSIs. But fraud is a nettlesome issue that grocers must address. Not doing so hurts grocers as well as the marketers that issue the coupons.

    The extent of fraud depends on the type of digital coupon: internet print-at-home (PAH) coupons or download-to-card/phone incentives. PAH fraud is a major problem, while the latter is an emerging one.

    I recently researched the growth of digital coupons. When it comes to dealing with fraud, experts pointed out several mistakes that grocers should avoid. I knew some of them, but others surprised me. Here’s the list:

    • Not Posting Coupon Policies for Shoppers: Grocers need to have in place a clearly stated and easily visible coupon acceptance policy online and in store that specifies redemption limits, restrictions on coupon use per store visit, and so forth. 
    • Not Offering Employee Training: The absence of employee training and operating procedures in place makes it less likely that store personnel can detect suspicious or expired coupons.
    • Not Having a Look-back Period: Suppliers of mobile receipt marketing must provide a look-back period to capture any potential returns within 24 hours of a product purchase.
    • Not Having a Strict Return Policy: Overly generous return policies have been exploited by criminals who make large purchases with coupons, only to immediately – sometimes without even leaving the store – return the product and demand a full refund, including the value of the coupons. “Occasional returns are an appropriate and reasonable part of shopping and customer service,” explained Bud Miller, executive director of the Coupon Information Center (CIC).

    “However, intentional and repeated returns of the same product can be a method to steal. Tighter return policies and enforcement of those policies will benefit all industry participants, especially the retailers who have longer lines, unnecessarily utilize customer service resources, and have to restock or destroy product as a result of such activities.”

    Miller observed that some retailers have a policy of “if it scans, we pay.” This position undermines other anti-fraud protections and helps criminals who intentionally seek out and exploit weaknesses in the grocery industry.  

    By John Karolefski
    • About John Karolefski John Karolefski is a veteran business journalist with 25 years of experience covering CPG, retail and technology. Over the years, he has edited several trade publications and is the co-author of three books: "TARGET 2000: the Rising Tide of TechnoMarketing," "All about Sampling and Demonstrations," and "Consumer-Centric Category Management." He has appeared on CNN, CBS Radio and BBC Radio to discuss marketing issues. He can be reached at [email protected]

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