Updated: Oct 25, 2021
DRASInt RISK ALLIANCE PRIVATE LIMITED
“Freebies can affect you to any level, at best you can be added to a junk mail or spam call list while at worst, you will be risking on to your identity”
(Sharon Feiereisen, n.d.)
In terms of promoting, a voucher can be called as any piece of document of any ticket that can be redeemed for a financial discount or rebate when purchasing a product. Coupon strategy is usually practised when businesses need to expand their sale and marketing. They may play a trick on clever marketing technique based on offering cheap items during special days. Customer may unwillingly fall in trap under coupon fraud, unaware of regarding any legal strategy. It’s a concern for both trading partners i.e. the seller and the customer. Organizations do try to control or minimise their loss and take steps to mitigate the risk and evolve financial fraud strategies associated with counterfeiting.
The Coupon Information Corporation, defines coupon fraud as someone intentionally using a coupon for a product that he/she has not purchased or otherwise fails to satisfy the terms and conditions for redemption (Bridge, n.d.). Coupon fraud is the illegal reproduction of commercially issued discount coupons or store-promotion currency. People, who have probably never heard of a business will flock out and check the deals provided by the fraudsters. It is marketing strategy that takes advantage of consumer interest in saving money on purchases. A fake presentation of fake products to customers, less than the regular cost, which could eventually have an impact on customer loyalty and satisfaction. Coupon frauds can happen in two ways:
An effective coupon marketing campaign can run as an online promotion. Online promotion of a company through coupon marketing is usually accomplished by sending emails to recipients who probably for instance, could have signed up for a newsletter from the company.
Another way could be running a business in traditional way. A traditional campaign could be followed which involves sending out the mail to the targeted group of customers.
In recent years genuine saving coupons strategy have made a good economical start in markets, as it allows you to purchase something which you were not able to buy as you couldn’t afford on its original retail price. The use of coupons spread from grocery to cosmetics, jewellery, household items, furniture, restaurants, online marketing apps, online fooding apps and many other countless services. With due development in living conditions, a high dependence on online marketing and festive offers have surged the ratio of sales and has benefited both customers as well as retailers to a high extent. Once customers start using coupons frequently, they search for a new coupon scheme. This makes them more vulnerable to fall into prey of coupon scammers. The fake coupons which are regularly found floating on internet sites and are widely circulated, entices people to use them and in return they get scammed. It’s a global trend. Now almost every store offer own coupons or promo codes as a marketing strategy. From high end stores to local departmental stores, there is an array of promotional codes to lure people and call for the purchases.
How does Coupon Fraud Works?
Many retailers and manufacturers offer coupons. They are a good promotional device and are very effective in generating sales. In the marketing of retail products, often merchandisers promote sales with discount coupons, which are required to be redeemed. Fraudsters often try to copy the legitimate coupons thereby, altering various important information like its expiring date, product/ brand name or the amount of the discount. These fake coupons are often scanned or photocopied. Coupons frauds usually presents itself in three ways (Connell, 2005):
Counterfeit Coupon: Coupon used for forgery or fraudulent purpose by making an imitation of a genuine and authentic coupon offered by any organization, with an ill-intention to deceive, steal, destroy or replace the original so that individual will be deceived while believing the reality of coupon.
Coupon Certificate Books: It means a bound collection of coupons which are mostly redeemable by a merchant or several designated merchants. Mostly these books include entertainment discount coupons, or online shopping coupons (Law Insider, n.d.).
Work-at Home Scams Involving Coupon Clipping: the removal of interest coupons attached to a bearer bond in order that they might be taken to a bank or sent to a paying agent for redemption. These coupons are just the ‘clipped-form’ of a genuine coupon. It includes the fixed-income securities which come printed with coupons on them.
Not only customers but reputed and well-established companies whose names are used for such illegalities, suffer from getting victimized in counterfeiting. One must stay patient, attentive and aware with the clear red flags present in the coupons made with fraudulent purposes:
Doctored Look on Coupon: An excessively well-decorated, bit hazy, complete or partial fake logo or slogan or any tagline to any reputed brand and so on. These all are somewhat really obvious tell-tale signs.
Coupons in PDF Files: This may be a significant fact-finder leading to copyright issues. Manufactures actually print their coupons in the format of a PDF, believing it to be uncrackable but in real scenario, they are probably the easiest to modify.
An Extended Expiring Date: Usually, the better the deal is, the less time you will have to cash on it. A suspicious long time for validity, mostly half a year particularly on high value items, suggests a high chances of counterfeiting.
Suspicious Coupon: A piece of document containing altered/ forged ID, inconsistent or irrelevant photo, fake address or other information can be considered as a coupon fraud.
Avoid Clipping Services: The best way to avoid any accidental coupon fraud is by not using clippings of coupon which are most often sent on emails. These clippings include coupon containing huge discounts or even free products.
Online Freebies: Few things are truly free, so stay cautious on every freebie and giveaways that require signing up for anything.
Eye-catching Font: An attention grabbing font and a theme followed by a fashionable design in order to attract the customers. Every deal has a theme as related to occasion or which best suits your narrative.
Excise Caution on High-value Coupons: One must be aware of unusual high face value coupons, which are attractive and most vulnerable to counterfeit than lower face value coupons. Liability for coupons must be addressed before falling into trap.
Promo codes Frauds
Promo codes are alphanumeric strings that online stores offer with an aim to encourage purchases on their websites and are typically associated with an overarching promotional marketing strategy. Promo codes are used by e-commerce platforms to get new users to sign up for or refer the site, or app, to others and get additional benefits. Promo-codes and coupons are conjectured to turn new users into permanent or regular customers i.e. as an effective customer retention strategy. The discount claims a fake promo code which can be used for individual products or an entire order. These discounts can be in two forms: based on percentile-off or a specific money amount.
Whenever any store provides any promotional codes, they issue them by promoting incentives and benefits for both the customer as well as business. Customers get the needed-products on a lower price and due to this the organisation gets profit out of them. Promotional codes works well with new as well as returning customers. The profits and incentives acquired by business for marketing purposes have a direct impact on the overall shopping experience. This fact was supported by a research conducted by the Centre for Neuro-economics Studies, Claremont Graduate University (Commerce, n.d.).
Promo codes, coupons and vouches are considered the most reliable and productive strategies to attract new customers. Marketing for coupons and promo codes through social channels is on rise. Spreading of special codes on online purchases is a new way to lure the users for referring the site to friends, downloading the website’s mobile app or even for buying new products. Most of it falls in illegal domain.
With the rise of people spending their time on social media during the COVID-19 pandemic, scammers are now jumping on their opportunity to scam the genuine customer through social media. Often found floating along the boundaries of webpage, these promo codes are mostly purposed for malicious activities to grab money illegally. They are often framed to seek and steal personal information.
The better the deal looks, the more likely it’s fake. It is easy for scammers to steal logos or images and establish their own identity as a result to making of counterfeit coupons. Every day there’s a new round of fake coupons on social media. With the growing lucrative market, cyber criminals are taking advantage of coupon fraud for their own payday.
Bridge, S. (n.d.). Extreme Couponing or Coupon Fraud_ _ StoneBridge Business Partners.
Commerce, B. (n.d.). What are promotional codes and how do they work? | BigCommerce. Retrieved from https://www.bigcommerce.com/ecommerce-answers/what-are-promotional-codes-and-how-do-they-work/
Connell, D. W. (2005). Financial Investigation and Forensic Accounting. In Financial Investigation and Forensic Accounting. https://doi.org/10.1201/9781420039061
Law Insider. (n.d.). Neurotrauma | legal definition of Neurotrauma by Law Insider. Retrieved from https://www.lawinsider.com/dictionary/neurotrauma
Sharon Feiereisen. (n.d.). Beware of door-buster deals. Business Insider.
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