Experts Promote a Positive Offer File to Prevent Coupon Fraud
By Jack Grant
The distribution of paper coupons may be decreasing, but coupon fraud is increasing at the same time. Paper redemption is about 75 percent of promotions that are being validated. And in most cases, the payment decision is made after the promotions are accepted in the store.
Coupon experts say deploying a positive offer file at the point of sale will help prevent fraud. A positive offer file is a database of all distributed, serialized coupons available for redemption. It is considered a proactive way to ensure intended, valid redemptions.
That was the consensus of speakers participating in a panel discussion during the recent LEAD Marketing Conference. The virtual event that attracted some 252 registrants was hosted by CPGmatters and moderated by Editor John Karolefski.
“Real-time validation that happens at the point of sale is not going to allow fraudulent coupons to be accepted, which is the way to combat fraud in the best possible way,” said Beth Buresh, President, Intelligent Clearing Network (ICN), a software-as-a-service (SaaS) company that electronically validates and clears paper and digital coupons in real time at the point of sale.
Two trading partners taking part in the panel discussion agreed.
“From our perspective, we’ve been using a positive offer verification process in stores and we’ve seen a significant decrease,” said Curtis Jackson of Procter & Gamble. “Counterfeit fraud is a huge increase over the last year to the tune of 50-60 percent. At the same time, when we were using the positive offer verification in the stores, we’ve seen an 80 percent decrease. It’s just an amazing tool.”
The ability of the retailer to control coupon fraud is minimal without some technology to support it, according to Alex Kota, a former Kmart executive. “If you can find a solution to these [fraud] issues that is not a stand-alone, but is integrated into the process, that’s the solution that you need,” he said. “Those type of solutions are critical in moving forward in eliminating fraudulent coupons.”
The panelist agreed that identifying fraudulent coupons places too much burden on the cashier. The counterfeits are “just too good to catch with the eye,” said Jackson.
“At Kmart, we were dependent on the operator to determine if it’s a good coupon or a bad coupon,” said Kota. “But the operators were timed on their transaction throughput. So, the emphasis was to be as fast as possible. Say the customer had 20 coupons. We required the operator to look at each coupon to see if it was in the purchase and then scan and accept it. Removing that time and decision process speeds up the checkout significantly. Enabling a process that detects good coupons and bad coupons is very critical in accepting additional expense. So, these types of technologies ae very important to the retailer,” he said.
P&G’s Jackson said the key is the cooperation between the manufacturer and the retailer in coming together in a collaborative spirit to stop coupon fraud. “If we can come together and figure out the best way to bring this to light, it would solve one of the bigger problems in the coupon community.”
Jackson and the other panelists agreed that the right technology will prevent the loss of money. “If you don’t apply the controls, the manufacturers or retailers are going to be out of money and that is what we are trying to avoid,” said Buresh.
She recommended increasing the use of real-time validation and clearing of coupons; that is, using data that is embedded within GS1 Data Bar Codes in conjunction with data from actual purchases to validate, clear and settle paper incentives. “Ensuring proper use of these promotions is key to receiving the full reimbursement and ensuring there is no fraud,” she said.
The positive file validation has reduced the fraudulent coupon activity by some 80% for one of ICN’s clients,” said Jon Robertson, Vice President of Marketing.