A 1-2 Tech Punch for Coupon Fraud

Quick serve restaurants (QSRs) have always had slim profit margins—typically 6-9%. When the numbers are that tight, the last thing these businesses need is fraud to take away from the bottom line. Unfortunately, though, coupon fraud costs US businesses across all industries $300-600 million every single year.

Many QSRs experienced a popularity surge during COVID. As of January 2021, 15-20% of customer transactions at QSRs were from new customers, compared to 5-7% before the pandemic began. Overall, QSRs have seen a 22% increase in average order value since the pandemic began, which means you have opportunities to connect with and engage a much wider audience. But the fraudsters are still out there in full force.

So what’s the solution? Stop giving customers special offers? Eliminate your loyalty program

No and no.

While fraud is a growing problem, there are ways for your technology to virtually eliminate it. Before we get into them, though, let’s discuss the current fraud landscape so that you can see just how powerful the right technology can be.

Fraudsters have been around as long as coupons have. Illegally altering the terms, expiration dates, and even barcodes on paper coupons is more common than you think. And even though digital coupons can’t physically be changed or photocopied, there are plenty of fraudsters out there who hack into accounts, steal codes and points, and shift them into their own accounts. You can even find stolen account points and QSR-specific fraud tools for sale on the dark web.

Fraudsters who aren’t so technically savvy may not take it that far, but they still pose a serious threat. Some widely share offer codes online or even charge other people for access to them. Others will try to talk a server or cashier into accepting an offer that doesn’t apply, like a free meal that costs more instead of the meal that’s specified on the offer.

No matter how they do it, fraud can add up fast.

For example, a couple in Virginia faces decades in prison for selling counterfeit coupons online that cost retailers and manufacturers more than $31 million. And then there’s the fraudster in West Virginia who was recently sentenced to 6 months of home detention and 3 years probation for stealing almost $100,000 from Kmart with fake mobile coupons.

Now let’s talk about the 1-2 tech punch that you can use to avoid situations like these.

Real-time single-use offer validation

If each of your offers comes with its own unique code that can only be redeemed once, you can take a huge bite out of fraud. Forget selling these codes on the web or having people give them to all of their friends. When the offer is redeemed, your offer management technology checks it off the list—in real-time—and it can never be used again.

Plus, your offer management platform can capture and sort this real-time redemption data in a variety of ways, which will help you measure results and optimize future campaigns.

Bi-directional POS integration

One of the biggest factors in offer fraud is the inability to authenticate promos at the POS. That’s why having an offer management platform and a POS system that can “talk” to each other is so vital.  Not only will your POS automatically recognize the single-use offers you’ve created, you don’t have to worry about giving your employees any special training to handle these offers. Everything is done electronically, so there’s no chance of them ringing up something incorrectly or being talked into redeeming an expired offer.

As an added benefit, a bi-directional POS integration will close the information loop by giving you a real-time view of your costs for each campaign. After all, when you create a specific offer campaign, you know exactly how much it’s going to cost you if each one is redeemed.

By leveraging this 1-2 punch, you can feel confident using all of your digital and physical marketing channels—not just your app—to distribute offers.

We help our customers leverage this 1-2 punch every day. In fact, First Watch originally turned to Sparkfly because it wanted to give its e-club members all kinds of personalized offers through a variety of marketing channels, but needed a platform that ensured those offers couldn’t be duplicated and shared outside of their intended audience.

All of those e-club offers come with single-use codes that can be validated in real time. And since our platform connects directly to their POS, First Watch’s operational efficiency has seen a boost, in part because managers don’t have to authorize any of the codes or manually add various offers into the system. As a result, the First Watch team has been able to see nearly 1 million offers—adding up to more than $15 million in revenue—redeemed in real time.

So don’t give in to the stress of offer fraud. With the right plan, you can create the experiences customers have come to expect, without fraudsters taking a bite out of your profits.