Jake Tackett
Jake is the Director of Coupon and Rebate Products at Arrowhead, specializing in innovative digital strategy and optimizing client experience. He currently serves on the ACP Board and leads Arrowhead’s Promo Portal.
Establishing best practices for promotional security
When you go to bed at night, you probably follow a set routine designed to keep you, your family, and your home safe. Check the locks. Close and lock accessible windows. Maybe turn on some outside security lights. These are best practices.
Brands that want to keep their promotions as free from fraud as possible should also follow best practices while designing their offers. Registration is a key part of that process, and one that is consistently targeted by fraudsters.
How a customer claims an offer involves registration of the customer, and validation of the claim. Is this the right product for the offer? Does the customer meet the criteria for the offer? The tricky part for brands is deciding how to design these processes in a way that provides an adequate defense to protect the brand from fraud and isn’t so onerous as to turn off the customer.
Balancing fraud mitigation with customer experience
Typically, registration involves getting information from the individual claiming the offer. This might be a lot of information for a promotion that is high value, or it might be less information for a lower value promotion that carries less risk.
Fraud happens when people submit false information, and it can quickly multiply in scope if you don’t follow best practices. As soon as someone figures out they can get a $1.00 rebate with falsified information, that one-off instance of fraud can become an exponential problem by using bots and other spoofing tools.
Designing a balanced registration process might introduce some complexity for your customer. However, if it’s done right, you can create a positive customer experience, while also mitigating risk. That might include additional safeguards, like two-factor authentication for high-value promotions, giving you a stronger line of defense against fraudulent activity.
Additional fraud deterrents could be as simple as ensuring your Terms & Conditions clearly state that falsifying information for registration is a prosecutable offense.
Brands will also want to monitor redemption rates, understanding there are differences between digital and physical coupon redemption rates. This is data you collect to understand the reach of your campaign, and to monitor for unusual spikes and other anomalies that might be an indicator of fraud. Through machine learning, your promotional partner should be able to quickly spot rates that fall out of the norm, indicating possible fraud.
Can AI help?
In terms of registration and fraud mitigation, the answer is complicated. Optical Character Recognition (OCR) has been an industry standard for quickly processing thousands of submissions. Fraudsters using ever more sophisticated AI to create fake receipts have been able to bypass OCR. Because AI currently has a tough time delineating between what’s real and what’s been created by AI, it’s not as useful ad spotting fakes as one might hope. As artificial intelligence improves that will change.
For now, human intervention, and best practices around verification standards already in use remain critical for fraud mitigation.
That’s not to say the industry isn’t innovating technology to deter bad actors. Universal Coupons aim to mitigate fraud by serializing each individual coupon so that coupon is removed from the database the moment a customer redeems it. It’s similar to blockchain technology, and greatly lessens the ability of fraudsters to create fake submissions because it provides real-time, third-party validation. Universal Coupons are currently in testing with major retailers.
When can we declare victory over fraudsters?
The honest answer is humans are clever, and they will continue to look for ways to commit fraud. That’s’ why it is so important not just to understand how best practices can help, but also to commit to following them. Arrowhead works with our clients to ensure they remain updated on best practices as technology evolves, so that together we can design and execute our clients’ promotional campaigns with the best defense possible.
