Digital Incentives Are Not Fraud Proof
SOME CONSUMERS are looking to the Internet and flea markets to get those “too good to be true” deals on their favorite products, which are increasingly hard to afford in an inflationary economy. Whether they are supplied by counterfeit coupons or just shoplifting, stolen goods have a strong demand. These black markets require enhanced loss prevention methods and vigilance by industry participants, particularly in the quickly evolving digital ecosystem.
The industry has increasingly turned to digital incentives and technologies to address declines in newspaper readership and widespread fraud in redemption of paper coupons. However, digital incentives are not fraud-proof. Technology-centric loss prevention efforts have vulnerabilities. The sad fact is that criminals are adapting to new security features and technologies.
The Coupon Information Corporation (CIC) recently observed a known coupon counterfeiter successfully circumvent positive offer file loss prevention efforts, which is one of the industry’s major initiatives. The CIC also has received a report from a retailer about a separate, but similar, incident via CIC’s Suspect Coupon Checker App. In response, CIC has initiated a dual track program to address digital incentive fraud:
- Law Enforcement Liaison: Security Professionals from CIC member companies and CIC staff are working together to lay the foundation for criminal prosecution of individuals who engage in digital incentive fraud. This will include a fresh and innovative review of evidence procedures, statutes, investigative techniques, documentation requirements, and best practices.
- Loss Prevention: CIC members are working to identify new loss prevention opportunities including fraud notification procedures, CIC Suspect Coupon Checker App enhancements, advanced reporting, and fraud detection.
“The industry should implement fraud deterrents and defensible criminal elements in the digital environment akin to physical coupon programs,” noted Jay Samson, CFE, LPEC, Senior Manager, Investigations of General Mills. “Working together on appropriate and reasonable solutions is prudent and will reduce the chance of industry participants from being blindsided by criminal activities.”
The CIC will reach out to retailers, other industry participants, and law enforcement agencies as part of this process.
The CIC recommends a layered defense using multiple technologies and other techniques to reduce fraud exposure and to identify and prosecute criminals. These include the use of the CIC Early Warning File, positive offer files, the CIC Suspect Coupon Checker App, education and training, situational awareness, internal controls, auditing, and voluntary best practices.
Please contact the CIC at (239) 331-7280 or aa@couponinformationcenter.com if you are interested in supporting this effort with your ideas and experience.
