The Complete Guide to Coupon Abuse Prevention

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The Complete Guide to Coupon Abuse Prevention [The Shopify Edition]

 By Pete Martin

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Want to cut down on costly coupon abuse? Read our complete guide to detecting a preventing this drain on your profits.

Coupons have long been a popular and effective method of enticing customers to try a new product or service.

And for just as long, less unscrupulous members of the public have looked to game the system for their own illegal gain. Loopholes, counterfeiting, theft. You name it.

If you’re a Shopify owner wanting to protect your business and your bottom line, this guide will tell you exactly how you can spot the abuse and how you can stop it.

What is Coupon Abuse?

Coupon abuse is committed where individuals use coupons or promotions offered by a company or commerce platform in order to get discounts under false pretenses.

Online coupons have conditions that dictate when you can use them, which products you can use them on and how many times you can use them. If you don't satisfy these conditions, you are using a coupon fraudulently.

The most common types of abuse are:

1.     Multiple/duplicate coupons

Customers using more than one coupon for a single item.

2.     Stolen/re-sold coupons

When someone other than the coupons rightful recipient uses the coupon- either because it was stolen or sold.

3.     Counterfeit coupons

Scammers creating fake coupons, based on existing coupon templates.

4.     Float abuse

Coupons used to purchase items, which are then returned to claim a full cash refund.

These are just some of more popular detected abuses and they share one thing in common- it’s your profit margins that take the hit. And a considerable hit it adds up to be…

.The Impact of E-commerce Fraud on Shopify Merchants

E-commerce fraud is a huge problem for people who sell products via platforms like Shopify.

And part of the problem is actually public perception.

Coupon abuse done on a less-industrial scale is seen as a ‘life hack’- just the due diligence you do before you purchase, to get yourself the best possible deal.

The thing about is perspectives is there is more than one, and while single customers pat themselves on the back for a wily purchase, the impact these actions, en-mass, have on the vendor is rarely given a second thought.

Larger businesses can take the hit, with security in place to tackle abuses more readily- smaller vendors are not so lucky. They’re already fighting against the economies of scale from their larger competitors, now coupon abuses can drive up the cost of their customer acquisition or even scare them away from utilizing what is a precious marketing tool.

So they lose out, and so, ultimately does the prospective, honest customer.

Luckily, there ARE ways to distinguish legitimate coupon use from the fraudulent.

How to Detect a Coupon That is Being Abused

With coupon fraud becoming more and more commonplace, it can be difficult to detect a coupon that is being abused.

However, if you know what to look for, you'll be able to tackle the abuse straightaway and minimise the damage.

Some of the easiest way to detect coupon abuse are:

·         Use analytics tools, such as ‘Tracking Coupon Codes' in Google Analytics, to detect suspicious activity on your website.

·         Reviewing how many times a coupon has been redeemed.

·         Using the range of fraud analytics provided by Shopify's various plans, such as Shopify Payments, Shopify Plan and Shopify Plus.

·         Look out for people circulating your coupon codes online- even sporadic google searches for “your store title/product + voucher”

·         Keeping an eye out for customers making lots of orders in a short space of time.

Fraudsters act fast to exploit loopholes so if anything looks awry you need to get on top of it right away.

If you believe that one of your coupons is being abused by either an individual customer or several different customers, immediately limit usage of the coupon and get in touch with Shopify.

How to Prevent Coupon Abuse on Your Shopify Store

“Prevention is better than the cure”, as they say, and these are precautionary measures you can take to minimize the chances of fraudulent usage.

The most important thing for your Shopify business is that you have a clear plan for it. Acknowledging the risk and making allowances for it.

Luckily, Shopify give you a helping hand here too, providing plenty of guidance and help, so you should be able to easily implement these fraud prevention features into your e-commerce plan.

The State of Coupon Fraud: Just How Much Money is Lost?

The state of coupon fraud is much bigger than individual platforms like Shopify, but digital platforms like it are particularly vulnerable to a crime notoriously hard to detect, prove and punish.

It is approximated that coupon abuse accumulates to around $300 million per year- a quite incredible amount of money honest business owners are losing to fraudsters, with prosecutions and recovery rates almost negligible.

Coupon abuse won’t go away but between taking the steps above and by harnessing the power of community- Shopify merchants working together for the greater good, to keep on top of the latest scams- it’s impact can at least be softened.

The takeaways

Preventing coupon abuse requires constant vigilance of any promotions that you have on your products at that moment. As soon as you notice something that doesn't seem right, get in touch with a member of the Shopify help team and report it. If it does turn out to be an act of coupon abuse, you'll have protected your business and the businesses of many other Shopify merchants.

If prevention tactics are swift and robust, the likelihood is they’ll look for an easier scam elsewhere.

Coupons are an excellent marketing tactic for attracting customers to your business, but they don’t come without risk. Hopefully this article has helped you minimize yours.