How Brands Must Combat Promotional Fraud During the 2020 Holiday Season

It’s the most wonderful time of year…to prevent fraud.

A lot of people want your money this holiday season, and we’re not just talking about Ebenezer Scrooge. Not only are retailers dropping promos as a way to spur demand, but scammers and fraudsters are taking advantage of those discount programs too. At a time of economic uncertainty, with consumers unwilling to spend as they have in past years, bad actors are looking for their piece of the $730 billion pie that people are expected to spend during this year’s winter holiday retail sales.

End-of-year discounting is a tried-and-true strategy to bring in a wave of new and returning business to your company. Nearly $140 million in digital coupons in the U.S. were redeemed in 2019 alone. The National Retail Federation found that fraud cost retailers $62 billion in 2019, an increase of $51 billion — with a “B” — from the year before. COVID-19 may have thrown a wrench in spending, but with so much customer data available that went onward helping people during the government’s first stimulus package, the scams are likely to increase as consumer spending on gifts ticks up as the year comes to a close. With people planning to spend smaller than they have in the past, fraudsters will look to capitalize on more with less.

To better understand this problem, we must look at the fundamentals. Promo fraud in particular manipulates discount offers at the expense of the brand, and to the advantage of the fraudster. Most digital fraud via ecommerce isn’t committed by random people out for a bigger discount. It’s actually a severely large criminal operation that costs brands $12 billion in ecommerce revenue  during normal years. Brands running promos both big and small attract fraudsters using highly specialized hacking techniques, which means any ecommerce operation can be an easy target.

The money lost because of fraud is costly regardless of how big your brand is. Brand promos done right should have a built-in, highly calculated ROI, which negatively impacts a promotion’s cost when fraud occurs. Crunch the numbers and it’s easy to see how, with margins shrinking during COVID and this holiday season, brands can question whether running a promo is worth it at all if the potential losses outweigh the benefits. With fraud prevention solutions like RevTrax, the answer is that the risk is worth it.

RevTrax’s Offer Management Platform (OMP) empowers brands with hyper-personalized, and more secure offers that drive the best value from digital marketing efforts across multiple channels — all targeted toward a specific audience. Solutions like the OMP are dynamic in that they track conversions, and give brands actionable insights about their consumer journeys. 

For brands, seamless integration throughout the marketing stack gives checks and balances against costly fraud. This holiday season, when brands are going to push out as many promos as possible, brands will be vulnerable. Suites like RevTrax provide valuable protection for brands against scammers this holiday season.

Interested in learning more? We would love to help with your promotional marketing needs. Learn how RevTrax’s solutions can help your brand during this holiday season by speaking with a specialist today.

our blogs
Beyond Black Friday: Making Post-Holiday Email Campaigns Count

Beyond Black Friday: Making Post-Holiday Email Campaigns Count

With Black Friday now behind us, the holiday shopping season is in full throttle as families rush to get gifts in time for the holidays. Given how unpredictable inventory management and supply chains have been in recent months, consumers have been advised to shop...

Big News! Neptune Retail Solutions Acquires RevTrax

Big News! Neptune Retail Solutions Acquires RevTrax

  We are excited to share the news that RevTrax has been acquired by Neptune Retail Solutions (“NRS”). We formally announced our exclusive partnership with NRS last month, which was the prelude to today’s big announcement. NRS is one of the most well-respected...