EXPERT ANALYSIS
SECTION ONE
SECTION TWO
Whither Digital Coupon Fraud?  

The good news for forward-thinking marketers is that digital coupons are gaining in popularity among
consumers. The bad news is that digital coupon fraud is growing at the same time. Brands and retailers
have to put into place safeguards to protect themselves and shoppers.

DISCUSSION QUESTION:
What should product manufacturers and retailers do about digital coupon fraud?


EXPERT ANALYSIS:

Grocers and brands can take a number of steps to combat coupon fraud. Industry collaboration is a great start. There are a variety of trade organizations, such as the Coupon Information Center (CIC), where trading partners can collaborate to identify best practices for mitigating fraud.

There are also measures that manufacturers can take, specific to Print-at-Home (PAH) coupons, to help reduce the use of fraudulent coupons at checkout. By following some basic guidelines and adhering to industry standards for good coupon design, manufacturers can make counterfeiting coupons more difficult while making counterfeit coupons easier to detect.

Inmar recommends that manufacturers:

  • Control viewing and limit access for online coupons. Coupons should not be displayed online in a format that provides uncontrolled access or capture. Coupons should never be distributed online as PDFs or Word documents.
  • Manage promotion values. High-value offers and coupons for free products are popular targets for counterfeiters. If these kinds of promotions are to be distributed, consider issuing a L2C coupon as an alternative.
  • Use consistent coupon design standards. Consistent branding and use of industry-standard design (including use of legal copy), requires those individuals wanting to counterfeit coupons to work harder to produce coupons that appear to be compliant.
John Ross, President, Inmar Promotion Network


The best thing grocers and brands can do is to shift budget and technology to implement truly end-to-end digital coupons which offer no chance of replication or unintended distribution. These systems should secure messages between the browser and the back end system, and should use transaction IDs from the receipt for processing returns. 
Cheryl Black, CEO of YOU Technology


One approach to address retailer compatibility issues is to create digital coupon programs aligned with individual retailers rather than being distributed through a dedicated coupon website and their network of affiliated websites. A digital coupon distributed on a retailer website may be designed to align with that specific retailer’s POS technology and coupon processing systems.  Additionally, improved coupon handling practices and increased awareness of valid coupons distributed each week on the retailer’s own website may reduce issues related to improper redemption and the potential for other forms of fraud.  However, it may be more difficult for brand marketers to achieve scale for a promotion distributed across multiple retailer websites versus a coupon network. Additionally, by directing a brand’s shoppers to a retailer’s website, the retailer may capture a greater share of the equity from the promotion than the brand itself.  According to Kantar Media, nearly 80 percent of digital coupons printed or digitally clipped in 2015 were distributed on retailer websites.

A second approach to address shopper adoption issues is the shift from “print-at-home” (PAH) coupons, for which a physical coupon is actually printed and redeemed, to “load-to-card” (LTC) and “load-to-wallet” (LTW) digital offers, for which the purchase incentive is digitally clipped and assigned to a specific household or shopper through a loyalty card or other digital medium.  As fewer digital coupons are physically printed, fraud associated with copying and modifying offers may be reduced. As more digital offers are assigned to specific shoppers and linked to a specific transaction at a specific retailer, greater controls are integrated into the process.  However, the potential impact of a LTC/LTW offer may be diminished versus a printed coupon which provides the shopper with a tangible reminder of their purchase intent.  According to Kantar Media, the number of PAH offers decreased while the number of LTC/LTW offers increased in 2015. Dan Kitrell, Vice President, Accounts Solutions, Kantar Media


Retailers should program coupon management levels in their POS system to alert Customer Service Managers to potential fraudulent activities. They should exercise extreme caution when a consumer attempts to use any free product or numerous high value Internet Print-at-Home coupons. Retailers can utilize the full benefits of the GS-1 Databar and ensure that they are reading all fields and validating the products purchased to the coupon language. CPGs have added exclusionary copy to offers (sizes, sub brands, etc.) and updated family codes for their products to make the scanner do the approving versus the cashier.

Manufacturers should work with coupon processors to review:

  • Any coupon that does not match the database artwork file,
  • Monthly redemptions of all coupons with a focus on redemptions versus number circulated, not printed.
 
Insist that only one person at Headquarters review any request for high value coupons so a discussion can occur on the risks versus the rewards and insist that all proper security features be added to new coupon artwork. Monitor social media coupon blogs for anything out of the ordinary.  If couponers start talking about a “money maker,” or a “glitch” make sure that the coupons in question are legitimate.

Both Retailers and manufacturers should review and implement voluntary best practices.  For example, there are few, if any, free product coupons distributed via Internet Print-at-Home coupons. Participate at the CIC Industry Leadership Summit each March to address these and other security related challenges. Retailers can send a representative to the Summit free of charge, but space is limited. CIC has a number of free programs in place to assist retailers in addressing counterfeit coupons.  Please contact the CIC for more information at aa@couponinformationcenter.com.
Bud Miller, Executive Director, Coupon Information Center

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SECTION THREE