Coupon Fraud Protection - Use Cases - XTN Cognitive Security

COUPON FRAUD PROTECTION

Detect fraudulent accounts by correlating multiple identity and behavioral features.

Market Overview

Coupon Fraud is consistently on the rise. One or two people taking advantage of a promotion may not seem like a big problem. But in the case of fraudsters, Coupon Fraud is committed at scale, causing decreased sales and revenue, ruined marketing spending, and poor user retention. Businesses that don’t prevent it can experience significant financial losses and brand damages.

What is it?

Coupon Fraud (also known as Promotion Fraud or Bonus Fraud) is an online fraud that takes advantage of a business offer. Two actor types commit coupon fraud: genuine customers and fraudsters. A genuine customer can misbehave, benefiting from discounts and deals more than he should by creating multiple accounts. A fraudster is usually part of an organized attack, exploiting promos on a large scale. In both cases, there is a financial loss for the business.

How does it work?

There are different business promotions vulnerable to abuse. Below we list the most common:

Sign-up bonus:
Fraudsters and customers abuse promos by multi-accounting to benefit the deal multiple times. Multi accounting is the creation of different accounts for fraudulent purposes. It ranges from something as basic as a customer logging out of one account and signing into another to fraudsters creating new IP addresses or synthetic IDs. Sign-up bonus abuse aims to gain gifts or special deals.

Referral bonus:
Referral bonus abuse takes place when a customer exploits rewards for referring friends. Organized fraudsters can drain a lot of money from businesses by creating multiple online accounts to refer themselves and gain rewards.

Vouchers:
Voucher abuse happens when businesses send out too simple and very predictable discount codes. Fraudsters can guess future codes and receive multiple discounts. At that point, genuine customers can’t redeem codes that have already been used fraudulently, so the business risk upsetting genuine customers, getting a bad reputation, and money loss.

The challenge

Promotions are very efficient marketing tactics, but they often imply vulnerability to abuse. Merchants often underestimate the Coupon Fraud threat, ignoring the damage to the brand reputation and the financial loss. Realistically, a merchant can pass over someone that completes two consecutive free trials, while it needs to discourage organized fraudsters effectively.

How we can help

The XTN Cognitive Security Platform® (CSP) can efficiently detect fraudulent and fake accounts by correlating multiple identity and behavioral features. The CSP can spot when numerous users share the same device by identifying users’ devices. This makes life difficult for fraudsters and users trying to open multiple fake accounts. Furthermore, the behavioral analysis features of the platform analyze the interaction in the application form to detect the user’s excessive savviness in interacting with the registration form or suspect low confidence in personal typing information that the user should well know. Also, integrating consistency checks and historical analysis of users’ personal information helps recognize synthetic accounts that reuse some of the user’s data (email, phone numbers, addresses).
Business Risks
Consequences of Coupon Fraud can impact a digital business by:
• Money loss
• Acquisition cost increased
• Reputational and brand damage
• Low-value customers
• Pricing integrity damage

Market Overview

Coupon Fraud is consistently on the rise. One or two people taking advantage of a promotion may not seem like a big problem. But in the case of fraudsters, Coupon Fraud is committed at scale, causing decreased sales and revenue, ruined marketing spending, and poor user retention. Businesses that don’t prevent it can experience significant financial losses and brand damages.

What is it?

Coupon Fraud (also known as Promotion Fraud or Bonus Fraud) is an online fraud that takes advantage of a business offer. Two actor types commit coupon fraud: genuine customers and fraudsters. A genuine customer can misbehave, benefiting from discounts and deals more than he should by creating multiple accounts. A fraudster is usually part of an organized attack, exploiting promos on a large scale. In both cases, there is a financial loss for the business.

How does it work?

There are different business promotions vulnerable to abuse. Below we list the most common:

Sign-up bonus:
Fraudsters and customers abuse promos by multi-accounting to benefit the deal multiple times. Multi accounting is the creation of different accounts for fraudulent purposes. It ranges from something as basic as a customer logging out of one account and signing into another to fraudsters creating new IP addresses or synthetic IDs. Sign-up bonus abuse aims to gain gifts or special deals.

Referral bonus:
Referral bonus abuse takes place when a customer exploits rewards for referring friends. Organized fraudsters can drain a lot of money from businesses by creating multiple online accounts to refer themselves and gain rewards.

Vouchers:
Voucher abuse happens when businesses send out too simple and very predictable discount codes. Fraudsters can guess future codes and receive multiple discounts. At that point, genuine customers can’t redeem codes that have already been used fraudulently, so the business risk upsetting genuine customers, getting a bad reputation, and money loss.

The challenge

Promotions are very efficient marketing tactics, but they often imply vulnerability to abuse. Merchants often underestimate the Coupon Fraud threat, ignoring the damage to the brand reputation and the financial loss. Realistically, a merchant can pass over someone that completes two consecutive free trials, while it needs to discourage organized fraudsters effectively.

How we can help

The XTN Cognitive Security Platform® (CSP) can efficiently detect fraudulent and fake accounts by correlating multiple identity and behavioral features. The CSP can spot when numerous users share the same device by identifying users’ devices. This makes life difficult for fraudsters and users trying to open multiple fake accounts. Furthermore, the behavioral analysis features of the platform analyze the interaction in the application form to detect the user’s excessive savviness in interacting with the registration form or suspect low confidence in personal typing information that the user should well know. Also, integrating consistency checks and historical analysis of users’ personal information helps recognize synthetic accounts that reuse some of the user’s data (email, phone numbers, addresses).
Business Risks
Consequences of Coupon Fraud can impact a digital business by:
• Money loss
• Acquisition cost increased
• Reputational and brand damage
• Low-value customers
• Pricing integrity damage

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