Fake vouchers and how to avoid fraud
Vouchers and coupons give customers key incentives to develop their interest in a brand but as the appeal of the marketing lever rises so do the stakes around misuse, counterfeiting and scams.
Above: By always using the latest security technology, Restaurant Choice is trusted to issue vouchers by the likes of Jamie’s Italian
Couponing can be a cost-effective way for brands to reward loyalty, drive purchase and encourage brand trial, and according to figures from the Institute of Promotional Marketing (IPM), consumers used them to save more than £2bn off their shopping last year. However, there is a growing risk of these types of incentives being manipulated through high-level scams, with industry sources suggesting the value of fraudulant vouchers or coupons could be in the many millions of pounds or higher.
With the tills at Tesco, Sainsbury’s, Morrisons, Asda, Waitrose and countless high street retail brands ringing with redemption, everybody wins until a well-regarded marketing mechanic falls prey to the fraudsters. Carling, for example, last year discovered a fake voucher claiming to offer £6 off a multi-pack which went into widespread circulation. Wholesalers moved to quash the success of the professional-looking scam, which included details of the brand owner Molson Coors and technology provider Valassis in the small print, by warning its retail customers not to accept the fakes.
“High value coupons, insufficiently strong terms and conditions, and coupons that can easily be reproduced are key factors contributing to coupon mis-redemption,” says Kim Robinson, European marketing services manager at Heinz and member of the Coupon Council at the IPM.
“We take measures to counter these issues,” she says, adding that retailers should only accept money-off coupons as payment at the checkout if the terms and conditions are met. For consumers, they should be wary if the information on the coupon is unprofessional and unclear, if it lacks contact details or if there’s no returns policy.
In response to growing concern from brands across sectors, eBay created new guidelines last year restricting the sale of vouchers on its website: “We do allow the sale of up to £100 or 25 vouchers by consumers but do not allow bulk sale,” comments a spokesman. Meanwhile Twitter covers voucher and coupon fraud within its counterfeit goods policy, warning that violations will result in account suspension of the user. Tweets by advertisers that violate this policy will be rejected and result in the removal of the advertiser from the Twitter Ads platform.
We go to great lengths to make it difficult to reproduce vouchers because you are effectively printing money
“Any increase in fakes is a danger to coupons, so we have been taking robust action to tackle abuses, in particular the sale of coupons that have been scanned or copied and then printed off in large numbers on online sites such as eBay,” adds IPM chairman Becky Munday.
Other seemingly more benign but nevertheless very real challenges for brands in this sphere involve consumers sharing an online voucher code with friends and their wider social network, copying vouchers and using vouchers more than once. To protect its business model for offering stock at an average of up to 70 per cent off, online retailer BrandAlley uses vouchers very carefully.
It uses vouchers to encourage different types of customer behaviour such as an incentive for first purchase or as a loyalty reward. “In order to avoid scams, we put the vouchers bespoke into the member’s account,” explains marketing and PR director Melissa Littler. “Where things get most tricky is if you put a more generic voucher out there that can do the rounds on social forums – a voucher might be valid for a certain period of time but if it is still available online a month down the line, consumers are querying why it is not valid.”
BrandAlley tackles this by only partnering with online forums such as Moneysavingexpert.com. “We would never put a code out that is generic because with social media it can be too damaging,” adds Littler. “We would expect Moneysavingexpert to remove the code from its site once the voucher offer is over so that we don’t get the tail and all the issues associated with it.”
O2 head of consumer loyalty and rewards James Reddington says not being able to control vouchers going viral is what worries most brands.
“One of the reasons why we are seeing an increase in fraud is the lack of development in the area around digital fulfilment of vouchers. Without this ability it makes it difficult for brands to control the distribution and validity of their vouchers.
“Brands are concerned that they don’t have the technical capability to manage and control the digital distribution of vouchers, and this scares them away in case the promotion goes viral.”
He suggests using technology to track and manage the vouchers’ fulfilment to protect the customers’ experience as well as the brand itself.
A still more worrying aspect of voucher crime in the social space is scammers who continue to create fake deals on social media sites such as Facebook with the hope of tricking people who ‘Like’ them into giving personal information, clicking onto links or downloading files. Fashion brand Asos was one company whose online brand profile was recently marred with such a scam, which led potential victims to a site where they were asked to complete a survey or download various applications. Argos and Amazon are other high street names that have been similarly targeted.
“These scams show the risks involved with utilising redeemable vouchers. There’s always a danger people will game the system or blatantly attempt fraud,” says Tom Valentine, managing director of online travel agency Secret Escapes. “Thankfully, so far, we’ve been isolated from any gaming attempts of this sort of scale, and we’re very good at spotting irregularities in our friend referral and affiliate programmes.”
In the fight against coupon and voucher scams, brands need to understand that when they print coupons they are effectively printing money and retailers need to be alert to fraudulent coupons, which are far easier to forge than bank notes.
“Fraudsters are becoming increasingly sophisticated in their ability to replicate gift vouchers,” acknowledges Andrew Johnson, director-general of the UK Gift Card and Voucher Association. “But the industry has responded by upgrading and updating the safety measures available and introducing new levels of security.”
Restaurant brands such as Nando’s, Jamie’s Italian and Zizzi work with B2B voucher brand The Restaurant Choice, which mitigates the risk of fraud by keeping up to date with the latest security measures available from manufacturers, and training restaurant staff regularly on recognising tell-tale signs of frauds.
Fundamental security measures include: using security printers that are alarm and CCTV monitored around the clock; keeping gift vouchers in vaults and moved by Securicor and using thermocratic ink that facilitates hologram security.
“From the paper to the hologram, we have gone to extraordinary lengths to make sure it is very difficult to reproduce the gift vouchers because we are effectively printing money,” says Jenny Cuthbert, director of The Restaurant Choice.
As well as securing paper voucher manufacturing, sophisticated technology can help tighten the digital redemption. Football club Leeds United puts store in the Talent software it uses to ticket its members and offer online promotions.
“Gone are the days when you need to dispatch paper discount vouchers because it can all be done securely online,” says Katie Holmes, head of ticketing at Leeds United. “Obviously there is a concern among brand owners about introducing a promotional code and it appearing on social media sites, resulting in the promotion being abused. But with our system, you can control your promotions by issuing unique promotional codes.” These can only be used once, thereby eliminating redemption issues, and gives clubs full control of their ticket promotions.
Over the past year, McDonald’s too has offered consumers an engaging digital experience – around its new products Fruit Smoothies, Iced Frappés and Mocha drinks with the reward of a free product. For the first six weeks of the Iced Fruit Smoothies campaign, users of the McDonald’s app had the chance to try a smoothie for free. In the app, users had to ‘break the ice’ on their screen, to find a hidden digital voucher that could be redeemed in store.
The app has had more than 1.9 million downloads since it launched. “With the increasing use of mobile technology and digital vouchering, it is important to build in security measures to protect both our customers and restaurants and to ensure the maximum number of customers can enjoy a reward,” says UK retail marketing director Nathalie Pomroy. “As part of the digital vouchering mechanism of our app, we have included features such as a date and time stamp as well as a device identification feature, which means that only one product can be redeemed per device.”
It is in the interests of manufacturers, retailers and consumers alike that coupons and vouchers be used responsibly. To keep apace of the inevitable pitfalls, the process of couponing and voucher marketing needs to continue to evolve so that brands can play an active part in reducing misuse and fraud.
The Big Three Challenges for Marketers
Fraudsters are becoming increasingly sophisticated in their ability to replicate vouchers and coupons and both consumers and retailers are falling prey to their tactics. Wholesaler Palmer & Harvey recently warned retailers about vouchers from brands including Lindt and Carling being fraudulently created and circulated through various channels including eBay. The frauds contained branded barcodes but had fake designs.
2. Redemption fraud
Coupons and vouchers aren’t usually meant to be transferable, and most brands make that clear in the terms and conditions printed on them. Cases of fraud often involve multiple redemption of vouchers and coupons, including when shoppers deliberately ignore the terms and conditions. To avoid over-redemption online, brands often use single-use voucher codes and trusted partners to promote them.
3. Social media scams
Keeping personal information safe from malicious websites and malware is paramount. With the popularity of vouchers riding high, consumers are at major risk of being lured by the fake promise of a free voucher for popular high street brands in exchange for ‘liking’ and sharing offers on social media.
“If it sounds too good to be true, it probably is. You can’t buy a pair of Louboutins for £30 no matter how good the deal is,” says Christine Fitzgerald, interim managing director of social shopping engine ShopStyle.
Marketing manager – loyalty, The Co-operative Food
Marketing Week (MW): What are the benefits of working with vouchers and coupons?
Chris Liddle (CL): We can provide relevant offers to both reward and stretch customer spend. It helps secure their shop with us and encourages these shoppers to buy into categories and products they may not have otherwise considered.
MW: What sort of results do you get from your campaigns?
CL: We’ve recently trialled a number of coupons involving the customer having to spend a certain amount to trigger the coupon and these proved very successful.
MW: Are you aware of the issues brands face over fraud and scams around vouchers?
CL: Very much so. All our coupons contain the member’s ID number, so we can match coupons back to the card they were issued against and this helps us to keep track of any misuse or fraud. Coupons targeting non-members contain a threshold that customers must spend, and this helps to manage the risk of misuse or fraud. We have a dedicated team monitoring campaigns to identify signs of any inappropriate use.
MW: Are you concerned about fraud and scams getting more sophisticated?
CL: We believe fraud will become less of an issue as offers become more targeted and the channels to redeem more personal.
MW: What would you say is the best practice for avoiding problems around fake vouchers?
CL: We work closely with our teams in stores and let them know what to look out for to help them stop any potential misuse or fraud. Personalising and differentiating the coupon itself, such as including, the membership number, discourages and inhibits abuse.