Whether you call them coupons, promotions or vouchers, you’ve likely asked the question: “How important are such incentives to your holiday shopping season?” According to consumers – very.

In the 2019 TransUnion Retail Fraud Survey, we asked 2,593 consumers about their plans for the upcoming holiday season and what factors would influence their purchasing decisions. 86% of respondents indicated that coupons, promotions or loyalty points were either important or very important in deciding who to shop with this holiday season. As evidenced by this answer, the importance of coupons, promotions and loyalty points should not be underestimated.

Promotions are a vital tool for attracting and retaining customers, but fraud and abuse can drastically undermine the profitability of such programs. Whether it’s existing customers setting up new accounts to bypass limits on promos, or coordinated fraud rings setting up hundreds of accounts and then using stolen credit cards to commit fraud, the losses can add up quickly. This is why it’s important to put robust controls in place to safeguard the long-term profitability of your customer acquisition and retention programs.

Recognize good customers from their first visit

One of the most effective methods to decrease promotion abuse, especially for new customer acquisition programs, is to use predictive machine learning to recognize trustworthy customers in real time. Trained on millions of confirmed fraud reports submitted by fraud experts, our adaptive, real-time algorithm scores the trustworthiness of transactions. This means that even if you’ve never seen a customer before, you can decide whether to allow them to set up a new account or send them a targeted promotion with confidence.

Target your best customers

Another key component to maximizing the value of your promotions is to improve the targeting. With device-based authentication you can confidently identify devices associated with your good customers, and target your promotions accordingly — maximizing the value of your incentives. This has the added benefit of improving the shopping experience for your good customers.

With device-based authentication, consumers can register known, safe devices to their accounts. Then every time a consumer logs in, you can check if the device is authorized for that account, or if it exhibits risk signals such as geolocation anomalies, data inconsistencies or evasion methods. If it’s a registered device you can allow them instant access to their account, providing a one-click shopping experience. You gain confidence that your promotions are being sent to known good customers, and your customers gain a seamless shopping experience.

New to you, but not to others

Collaboration is another key component to preventing promotion abuse. Wouldn’t you want to know if a device had been associated with past promotion abuse at your site or others before allowing the consumer to set up a new account or offering them an incentive? We can help with that.

In the past year we received over 7 million reports of promotion abuse from our network of 35,000 brands that we protect globally. Our fraud solutions allow you to place fraud and abuse reports on either an account or a device. Each report provides granular details about the type of fraud, which industry saw the fraud, when it happened, and all of the accounts and devices associated with the implicated account or device. This provides the insights to help you decide if you should stop a device from taking advantage of a promotion, even if it’s the first time you’ve seen the device.

So many accounts, so little time

Another key indicator of promotion abuse is unusual velocities. For example, if you have a single device that has set up 100 new accounts in an hour, that’s not a normal consumer behavior and likely requires investigation. With device intelligence you can monitor transactions for abnormal device and account velocities, and more quickly shut down promotion abuse.

The importance of promotions to driving a successful holiday shopping season can’t be overstated, which is why it’s important to protect against abuse that can dilute the value of your programs. To learn more about our findings from the 2019 TransUnion Retail Fraud Survey, download them here. If you’re interested in learning more about how iovation helps protect against promotion abuse, check out our case study with Rated People.