What Can Be Done to Prevent Coupon Fraud?     

By Linda Winick

The ability of the retailer to control or prevent coupon fraud is minimal without some kind of technology. It’s a very difficult problem for a cashier to detect.

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.

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 fraud often leads to non-payment to retailers and in some cases off invoice deductions, resulting in trading partner tension.

Here are some excerpts from the panel discussion:

What is the biggest challenge in combatting coupon fraud?

John Morgan, Executive Director of the Association of Coupon Professionals: We’re trying to make coupons as viable as possible going forward, and fraud is having a negative impact on that. The best thing we can do is execute best practices. Cheaters are cowards. They are taking the easiest path and look for the weakest link. If you are a manufacturer and you make a mistake on a coupon, they’re going to pounce on this. If you are a retailer, you need to read the full Databar and have an updated family code list to validate. So, execution of best practices is the biggest challenge.

Beth Buresh, President of Intelligent Clearing Network (ICN): The biggest challenge before us is just getting more retailers and manufacturers to look for new ways to combat fraud. And the number one place to do that is having more focus on the retail outlet. Having more focus on that and working with partners to getting that accomplished is key.

Kit Leonard, President of Brand Technologies: Keeping track of the fraudsters and getting law enforcement involved.

What abuses can be prevented at the POS and how can they be prevented?

Buresh of ICN: Scanning the offer multiple times when there is just one coupon, accepting expired coupons at the POS, and accepting counterfeit coupons. These abuses can be prevented by 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.

What are some of the challenges to getting positive file validation up and going?

Jon Robertson, Vice President of Marketing, Intelligent Clearing Network (ICN): It takes the support of all the CPGs and the retailers. It takes the manufacturer and retailer coming together in a collaborative spirit. It’s costing us all time, money, effort and frustration.

Buresh of ICN: It’s very important to balance your consumer experience. The other thing to keep in mind is that someone is out that money. If you don’t apply the control, the manufacturer or retailer is going to be out money, and that is what we are trying to avoid. So, again, real-time validation.

                                               Early December 2019
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