Preventing Coupon Frauds With Enhanced Safelinks

Coupon fraud is a growing problem for businesses in the ecommerce space, causing financial losses and damaging brand reputation. In fact, reports show a 30% increase in coupon fraud between 2022 and 2023, making it one of the top fraud types in retail. 

As consumers increasingly turn to online discounts, fraudsters have found ways to exploit coupon systems, often leaving businesses to deal with the fallout. For starters, unnoticed coupon misuse can directly impact your revenue, waste your resources, and disrupt the shopping experience for genuine customers. The rise of fake coupons and promo abuse hurts your profit margins while complicating marketing efforts and data tracking.

So, in this article, we’ll explore the problems of coupon fraud, highlight common red flags, and explore practical solutions, such as investing in Safelinks to protect your business from fraudsters. Read along!

What is coupon misuse?

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Coupon misuse happens when individuals intentionally exploit coupons in ways they aren't intended to be used. This can involve using a coupon more than once, sharing it without authorization, or altering the coupon's terms to gain more benefits than what was originally intended by the company. 

In fact, the statistics on fraudulent coupons are alarming:

• 90% of U.S. consumers use coupons when shopping.
• 73% of U.S. retail executives have reported experiencing some level of promotional fraud.
• A staggering 81% of coupon abuse attempts come from serial abusers.
• U.S. businesses lose between $300 million to $600 million annually due to coupon fraud.

What are the most common forms of coupon abuse?

Coupon abuse can take various forms. Some of the most common types of coupon abuse include:

• Customers misuse or redeem the same coupon multiple times.
• Coupon code leaks on community-driven discount sites, attracting one-time buyers and fraudsters.
• Code cracking and “coupon glittering" involve fraudsters exploiting mistakes in how coupons are programmed and redeeming them for unintended discounts.
• Affiliate fraud is where fake affiliates register orders as new customers to claim discounts.

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Check out our blog on the different types of affiliate fraud and how to stop them for a more in-depth understanding.

How to detect coupon fraud?

Detecting coupon fraud requires vigilance and the right tools to spot suspicious activity early. Here are a few common signs that indicate potential coupon fraud:

• Unusual redemption patterns: Keep an eye on high redemption rates in a short time frame or a single IP address, redeeming coupons multiple times. This could be a sign of fraudulent activity.
• Coupon sharing: If a coupon code is widely shared across platforms or outside of its intended audience, it may be misused. Be aware of unauthorized distribution channels.
• Multiple account creations: Fraudsters often create several fake accounts to exploit promotions. Look out for repeated sign-ups from the same IP address or with similar details.
• Geographic anomalies: Watch for coupon redemptions coming from locations that don’t match your target market or where your promotions aren't running.
• Inconsistent usage: If a customer uses multiple coupon codes or consistently redeems coupons in ways that don't align with the terms and conditions, it could indicate fraud.

6 Tips to combat coupon fraud and abuse

Adequately managing coupon usage is important for maintaining accurate ROI and to make sure your promotional campaigns are effective. The following strategies can help with coupon fraud prevention while also protecting your marketing budget:

1. Set redemption limits

Limit the number of times a coupon can be used to prevent repeated abuse.

• Single-use codes: Assign one-time-use codes to each customer so that each code can be redeemed only once.
• Campaign caps: For example, if you release a coupon for "50% off the first 100 orders," set the system to disable the code automatically after 100 redemptions.

This way, you control how much of your inventory or budget is impacted by the promotion.

2. Set clear coupon terms and conditions

Ambiguity in coupon rules invites misuse. Therefore, clearly define and communicate terms such as:

• Expiration dates: Make them visible on your website and in promotional emails.
• Usage limits: Allow only one coupon per customer or transaction at checkout.
• Exclusions: Specify products or categories where discounts don’t apply.

For example, a retailer offering 20% off might exclude high-value electronics. Stating “Excludes all items above $1,000” avoids confusion and misuse.

3. Generate unique, single-use codes

Unlike generic codes, these codes can only be used once, reducing the risk of bulk sharing, misuse, or unauthorized redemptions. For instance, a common issue arises when generic codes are leaked online or shared across multiple platforms, allowing unintended users to benefit. By assigning unique codes to each customer or campaign, businesses can track coupon usage more precisely and avoid abuse.

Tools like Social Snowball's Safelinks simplify this process by creating unique, single-use vouchers tied to specific customers or affiliates. If you run an affiliate program, affiliates get a dedicated link that automatically generates one-time-use codes for their audience. This improves accountability and minimizes fraudulent redemptions.

4. Integrate fraud detection tools

Fraud detection software is an essential investment. These tools monitor digital coupon activity for anomalies, such as:

• High redemption volumes from a single IP address.
• Coupons used outside their intended region.
• Sudden spikes in usage from new customers.

Also, implementing these tools makes sure that issues are caught early.

5. Monitor for duplicate accounts

Fraudsters often create multiple accounts to exploit coupon offers. Regularly audit accounts for:

• Repeated use of the same IP address or email pattern (e.g., john1@gmail.com, john2@gmail.com).
• Excessive account creation followed by immediate coupon redemptions.

6. Track referral sales with controlled cookies

One of the most common ways fraudsters exploit discounts is by misusing referral links to trigger illegitimate sales. This can include scenarios where referrals are self-generated or cookies are manipulated to gain rewards unfairly.

To tackle this, you can set up cookie tracking that allows you to track where a coupon code or referral link came from and make sure proper attribution for discounts or rewards. For instance, Social Snowball’s Safelinks allows you to choose whether or not to track a referral sale using cookies. 

This level of control guarantees that only legitimate coupon referrals are rewarded, helping you protect your program from abuse.

How does Safelinks help you prevent coupon fraud?

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Safelinks by Social Snowball is an innovative solution designed to eliminate coupon fraud and prevent affiliate attribution errors. It achieves this by generating unique, single-use discount codes for each customer referred through affiliate links. This makes sure only legitimate customers can use the codes, safeguarding your campaigns from abuse.

Here are the key features of Safelinks:

1. Unique link generation

Safelinks creates unique, trackable links that automatically generate single-use discount codes for every customer who clicks them. This prevents unauthorized sharing, as leaked codes become unusable.

2. Advanced verification mechanisms

With Safelinks, browser extensions, and coupon sites cannot inject or exploit codes. Discount codes are only generated when referred through approved affiliate links, guaranteeing their legitimacy.

3. Real-time monitoring

Safelinks allows for instant detection and prevention of coupon misuse. If a coupon site attempts to generate a code, Safelink automatically blocks the action, protecting your campaign integrity.

Advantages of using Safelink

Safelinks not only safeguards your campaigns but also delivers measurable benefits such as:

• Improved campaign control: Protect discount codes from leaks and unauthorized usage.
• Better customer experience: Provide a seamless and legitimate discounting process for your customers.
• Increased ROI on promotional campaigns: Eliminate fraud and attribution errors to optimize campaign performance.

Case study: How an ecommerce brand solved coupon frauds with Social Snowball

Tumble, a brand known for its innovative home products, faced a persistent issue with affiliate fraud. Their discount codes were regularly leaked, resulting in unauthorized usage and lost revenue.

To address these leaks, Tumble integrated Safelinks into its affiliate marketing program. Safelinks generates unique, single-use discount codes for each customer who clicks an affiliate link. These codes expire immediately after use, making sure that they cannot be reused or leaked.

The result?

• Tumble’s customer support team no longer needed to manually track leaked codes. Safelinks’ automated fraud detection eliminated the need for constant monitoring.
• By securing its affiliate program, Tumble achieved a 22.86x ROI and saw a 4% growth in total revenue.
• With reduced fraudulent activity, Tumble was able to focus on expanding its affiliate program and rewarding genuine partners.

Conclusion

Coupon fraud is a serious issue that can harm your business’s revenue, reputation, and customer trust. By identifying red flags like unusual redemption patterns, unauthorized coupon sharing, and multiple account creations, you can detect and prevent fraud early on. Implementing the right tools is essential to protecting your business and marketing strategies and maintaining efficiency.

For a more secure and streamlined approach to managing affiliate fraud, check out Safelinks from Social Snowball. Safelinks offers a unique, single-use discount code for every affiliate link, which helps prevent fraud and provides more accurate affiliate attribution.

Book a demo to see how Safelinks can safeguard your affiliate marketing program today.

Frequently asked questions

What are the benefits of sharing your promo code with new customers?

The benefits of sharing promo codes with new customers are:

• Promo codes reduce the initial hesitation of trying your brand, encouraging them to make their first purchase.
• A positive first shopping experience, improved through discounts, increases the chances of repeat purchases.
• Promo codes create urgency, driving immediate conversions.
• Happy customers often share promo codes, bringing in even more potential buyers.

Why should we try to help customers save money with coupons?

Coupons play a significant role in shaping customer purchasing decisions. They can:

• Create urgency: Limited-time offers push customers to act quickly.
• Drive upselling opportunities: A "spend more, save more" coupon can encourage higher-value orders.
• Attract budget-conscious shoppers: Coupons appeal to customers actively searching for the best deals.