5 Ways You Can Limit Coupon Abuse for Your Ecommerce Business



Coupons and other promotions are an excellent way for you to attract new customers and keep existing ones coming back to your ecommerce enterprise. However, there are always a few unscrupulous people who will abuse your generosity to perpetrate fraud on your business. Taking steps to stop these criminal behaviors before they happen can save you time, aggravation, and money.

Plan Carefully

If you process credit cards online, you are part of an ever-growing landscape of ecommerce businesses whose clients live not just in your town or state but all over the country. If you have an international footprint, they are even more geographically far-flung. While your expanded customer base can lead to positive national exposure, it can also make keeping track of your buyers more of a challenge. That’s where closley monitoring your business’s activity via your point-of-sale (POS) solution’s customer management and inventory tracking tools can be a godsend.

Before you start a coupon promotion, have a solid strategy firmly in place. You already know that your customers could come from many places, so prepare for this by offering different discounts or coupons depending on the part of the country, continent, or globe where the consumer lives. Then use your POS to keep track of which incentives are being used and by whom.

Another way to retain a handle on your customer rewards is to make them very time-sensitive. Be as generous as you want, but include a clear expiration date. That way, any damage that a fraudster does manage to do can be chronologically contained.

Focus on Giving Away Your Own Coupons

One of the best ways to reduce fraud is to do most of the heavy coupon lifting yourself. Many merchants prominently feature their most valuable coupon codes for all to see on their own home page. Alternatively, entice customers with the prospect of a generous discount in exchange for providing their email address.

Carefully Harness the Power of Affiliates

Even though you might prefer to dispense most of your discounts in-house, passing on some of the task to others is a powerful mechanism that has put many companies into sales hyper-drive. Affiliate marketing is a very effective way to get the word out about your business. With this system, you essentially pay a commission to another website whenever they refer one of their customers to you. They only get paid when a customer purchases one of your products or services. In order to promote what you have to offer, you may decide to allow these affiliates to share coupon codes or otherwise promote your brand.

On the surface, this can turn out to be a great marketing tool. However, it can backfire if you fail to be totally transparent about the terms and conditions of your promotions. It’s a smart idea to require that all of your affiliates “noindex” your brand pages. Once they do, your information will not come up as part of customers’ search results. As a result, the only buyers that affiliates can refer to you must come from their own blogs, forums, and promotions. Furthermore, affiliates must be told in no uncertain terms what will happen if their referrals engage in abuse of your coupons.

Stop Fraudsters at the Time of Registration

One of the ways that customers take advantage of ecommerce businesses’ coupon offers is to register over and over for the offers using different email addresses and mobile phone numbers. It is a relatively simple process to buy online phone numbers and receive SMS via websites that can be found after only the briefest of online searches.

To combat this phenomenon, one of your best weapons is to set up a phone verification process that new registrants must complete. After providing a legitimate phone number, the applicant receives a call or text message with a unique one-time code that they must provide online before their account is approved. Your phone number verification service can provide to you, in real time, information such as phone type and registration location, carrier, phone forwarding and SIM swap status, velocity, intelligence, and any reports of fraud.

Once you are armed with these data, you can immediately act on red flags by suspending the application until you can contact the customer directly. At that point, you can either resolve any misunderstandings or stop a potential fraudster in their tracks before they have been able to do any harm.

Consider Not Offering Coupons

This suggestion probably sounds counter-intuitive. Why would any ecommerce merchant want to shoot themselves in the foot by failing to furnish loyal customers with the motivation to make repeat purchases and refer their friends? The answer is that for some companies, giving out coupons just isn’t worth it. However, that doesn’t mean they have given up on providing incentives for loyalty.

Consider companies such as the shoe, clothing, and luxury handbag seller Zappos that offer free shipping and returns year-round. Although they neither give out coupons themselves nor allow other websites to do so, Zappos customers know upfront that they are receiving other valuable rewards. Many of these sellers also express their gratitude to purchasers by emailing a thank-you promotion that can be used for a few weeks after the purchase date.

In the end, the best way to avoid coupon fraud turns out to be no different from one of the strategies you have kept in mind since you first outlined your business plan: Know your customers. Ask yourself if they would respond better to geographically targeted promotions, affiliate strategies, or other sources of value that you build directly into your website. In addition, be aware that there is usually at least one rotten apple in every barrel, and it is essential that you protect yourself by taking steps to ensure that your hardware and software are up-to-date and you have security safeguards in place.

The truth is that online competition is back-breaking enough without also suffering numerous assaults from online crooks. By maximizing the fortress that protects you, your website, staff, and customers will all be safer.