Promo Code Abuse

Dealing with Promo Code Abuse with AI

Promo Codes, coupons and vouchers are considered some of the most reliable strategies to attract new customers. The e-commerce industry especially has been integrating Promo Codes to expand its business and increase its user base. Special codes are provided to lure users for referring the site to friends, downloading the website’s mobile app, or buying more products. 

However, the Promo Codes strategy often backfires for e-commerce businesses as fraudulent users or criminals have begun to use advanced techniques to abuse or exploit these offers and get illicit benefits or gains.

Promo Codes are used by e-commerce platforms to get new users to sign up for or refer the site, or app, to others and get additional benefits. Promo Codes and coupons are conjectured to turn new users into permanent or regular customers. On the contrary, some users have found a way to manipulate the use of these codes and promotions, causing heavy losses to businesses.

Some instances of Promo Code abuse in different e-commerce industries are: 

  1. A food tech business that offers discounts to its customers through ‘Refer Codes’ often end up facing huge losses as some users keep on creating new accounts from different devices and get discounts on their food orders. 
  2. Promo Code abuse of discounts on ‘Buy 2 Get Rs. 200 Off’ on Apparels gets combined with Friendly Frauds, whereby people not only abuse Promo Codes but also deny that they ever received the product. 
  3. Free Ride Coupons by Taxi apps get misused by fraudsters to claim free rides from numerous fake accounts.

The impact of these frauds is not only on the revenue and inventory of businesses but also occurs in the form of unrequired operational costs in responding to or in the prevention of these frauds, manually. 

Is there a way out?

Manual prevention of fraud in e-commerce can take a heavy toll on the business financially as well as in form of the workforce and resources wasted on the process. To get out of this multiplex problem, Artificial Intelligence can be employed to detect fraudulent transactions automatically. Fraud prevention solutions that are powered by AI can promptly identify fraudulent users in real time by scrutinising every transaction received by the platform. 

E-commerce Fraud prevention tools like Mitra evaluates each transaction associated to a Promo Code or Voucher with multiple benchmarks like the user’s phone number, device type, location, (related) traffic patterns and reported fraud, PIN code, IP Address, and many more. Each transaction is assessed in real time and is automatically distinguished as ‘genuine’ or ‘fake’. 

AI-built Promo Code fraud prevention measures leverage machine learning and device fingerprinting to find patterns of fraud. They automatically block Promo Code abusers from making transactions, once ‘flagged’ risky, and also accentuates ‘real’ users so that the business does not lose its genuine customers.

Promo Code abuse can be easily prevented by an e-commerce business by utilising the astounding features of AI-based fraud prevention systems. AI can swiftly analyse redemption rates, order details, device fingerprints, connected accounts and other user patterns to prevent Promo Code or Voucher abuse in e-commerce businesses.



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