Call to Action to Prevent Coupon Fraud     

By John Karolefski


“Coupon fraud is growing, and we see it in the news all the time. It’s store employees; it’s your neighbor; it’s your friends and family on social media. Today it can be anyone anywhere,” said Beth Buresh, president of Intelligent Clearing Network (ICN).
 
Buresh set the stage for a discussion of this problem in a recent webinar about how brands and retailers can prevent coupon fraud. It was presented during the recent LEAD Marketing Conference, a CPGmatters virtual event that attracted some 252 registrants.
  
Kit Leonard of Brand Technologies said most of the fraud today involves paper coupons – high-value coupons, print at home.

“But we are seeing a lot more digital fraud. Right now, a big thing we are seeing is the fraudsters are creating coupons that replicate a retailer’s loyalty program. A fraudster is presenting this coupon on a mobile device. It’s scanning and working,” said Leonard, whose international fraud and risk mitigation company performs investigations and remediation primarily for the CPG industry.
     
She said mis-redemption is when a retailer mistakenly accepts a coupon for a product it was not intended to discount. Meanwhile, mal-redemption – aka glitching – is when a consumer knowingly redeems a coupon for a product that the coupon is unintended for or is a counterfeit coupon.

“Today we see a growing problem with paper coupon fraud,” said Buresh of 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.
 
She said coupon fraud often leads to non-payment to retailers and in some cases off invoice deductions, resulting in trading partner tension. “Who’s going to pay for these unauthorized dollars given to consumers?”

She listed action steps that manufacturers can take to help reduce and control promotion liabilities:

  • Simply design and offer use criteria
  • Ensure accurate bar codes, using the GS1 Data Bar
  • Keep family code file updated
  • Always use expiration dates
  • Limit the face value of offer
  • Require purchase versus pure free offers
  • Limit use of 992
  • Utilize serialized offer validation
  • Utilize industry resources from the Association of Coupon Professionals (ACP) and the Joint Industry Coupon Committee (JICC).

“Every promotion has to be settled between trading partners,” Buresh said. “There are objectives and strategies for both partners that need to be met.”

Buresh listed steps that retailers can take to reduce promotion fraud:

  • Understand the level of validation that is currently performed at POS in your stores
  • Understand and track the value of what is scanned at POS and what is invoiced in the backend settlement process. 
  • Work to move settlement controls to POS, before the offer is taken
  • Identify stores causing adjustments
  • Implement both positive and negative file validation
  • Utilize industry resources from the Association of Coupon Professionals (ACP) and the Joint Industry Coupon Committee (JICC).

“We hear a lot about digital growth,” she pointed out. “But keep in mind that paper redemption is about 75 percent of promotions that are being validated. And in most cases, the payment decision is made after the promotions is accepted in the store.”

Buresh 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 summed up.

COUPONS                                 
                                               Mid-November 2019
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