Vampires are known to suck people dry of their blood. In the Commerce world, campires specifically suck the profits of eCommerce companies dry. We're calling promo abusers vampires because, like classic vampires, they sneak in, suck the life out of your business (in this case, your profits), and leave you drained. They take advantage of the discounts and promotions meant for genuine customers, but instead of giving back, they’re just out to bleed the system dry. They might look like harmless customers on the surface, but behind the scenes, they're multiplying accounts, gaming the system, and making off with more than their fair share.

Let's talk a bit more about it in details.

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What is promo abuse? 

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Let’s start by telling you what is a promotion code. A promo code is a digital coupon that offers discounts, incentives, or rewards when used during a purchase. They can be used to attract new customers, encourage repeat purchases, or promote specific products or services.

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• New User Bonuses: Discounts, cashback, or free services offered to new customers upon account creation.
• Sales Offers: Limited-time discounts or promotions available during specific sales periods.
• Referral Bonuses: Rewards for referring new customers to the platform.
• Loyalty Rewards: Discounts or special offers for long-term customers.

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And these coupons and incentives are pretty important for any digital company in expanding their customer base. A survey shows as much as 80% of shoppers are willing to “go out of their way” in order to find the best deal and 40% of them feel “smart” when they find the best offers. (Blackhawk Network)

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When does it become promo abuse fraud?

Promo abuse occurs when these users intentionally manipulates the terms and conditions of a promotional offer to gain an unfair advantage.

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The most common types of promo abuse:

• Overuse: When a customer uses promo codes excessively or for irrelevant purchases. For example, if a user on a food delivery platform like Uber Eats or Swiggy wants to take advantage of a “Flat 100 off,” instead of one big order, they will place multiple orders to reduce each individual cart’s amount. 
• Misuse: When promotions are used fraudulently or violate terms and conditions, a user may create multiple accounts to abuse the new sign-up discounts or free trials that they receive. This is easy enough to do if a user has multiple phone numbers and email addresses. 

In addition to the human-driven forms of promo abuse discussed earlier, there's a growing technical angle involving the use of bots to automate the process of finding and exploiting promo codes. These bots can be sophisticated programs designed to:

• Scrape websites: Bots can rapidly scan online retailers and coupon websites for promotional codes.
• Test codes: They can automatically enter and test countless codes to identify valid ones.
• Buy items: Once a valid code is found, bots can be programmed to purchase items at a discounted price

How are these ‘vampires’ sucking the profits of digital apps and services dry? 

1. Product revenue prediction and analytics takes a hit

• Inflated Revenue Projections: When promo codes are misused to create empty accounts or for one-time purchases, it can lead to inflated revenue projections. Businesses may mistakenly believe that their product or service is gaining traction when, in reality, the majority of the "customers" are not genuine.
• Skewed Analytics: The influx of fake or inactive accounts can distort analytics data, making it difficult for businesses to accurately assess customer behavior, preferences, and engagement. This can hinder their ability to make informed decisions about product development, marketing strategies, and resource allocation.

2. Operational costs increase

• Increased Code Management: The misuse of promo codes can necessitate more complex code management systems to track and prevent fraudulent activity. This can lead to increased operational costs.
• Customer Support Burden: Dealing with issues arising from promo abuse, such as disputes over refunds or account cancellations, can place a strain on customer support teams, further increasing operational costs.
• Lost Focus on Genuine Customers: The effort and resources spent on addressing promo abuse can divert attention away from attracting and retaining genuine customers, ultimately hindering business growth.

Related read: How to Improve Your Customer Onboarding Process?

3. Genuine customers get hurt

• Limited Availability: When promo codes are misused or redeemed in bulk, it can lead to limited availability for genuine customers who want to take advantage of the deals. This can create frustration and dissatisfaction among the intended target audience.
• Lost Opportunities: Genuine customers may miss out on valuable promotions or discounts due to the actions of those who abuse the system. This can erode customer loyalty and trust.
• Perceived Unfairness: If businesses are unable to effectively address promo abuse, it can create a perception of unfairness among genuine customers who feel they are being penalized for the actions of others.

In conclusion, promo abuse is not merely a minor inconvenience; it can have significant consequences that impact businesses and genuine customers alike

An army of vampires: “How to” guides on promo abuse  

When someone cracks the code on coupon loopholes, often by using sneaky tricks like app clones, they don't keep it a secret. Instead, they hit the social media, dropping "how-to" guides on YouTube and Facebook. 

These guides can spread like wildfire, turning hundreds or thousands of people into coupon code hackers.This phenomenon can be likened to an industrialization of coupon code hacking, as hundreds or even thousands of people may attempt to replicate these methods, collectively draining e-commerce profits and undermining the intended purpose of promotional offers.

Examples of famous promo abuses in the past 

Uber Eats Promo Abuse Scandal

In 2022, two men in Florida were arrested for allegedly scamming Uber Eats out of over $1 million. They exploited a loophole in the system to create fake accounts, posing as both customers and delivery drivers. By placing orders and then canceling them, they were able to obtain prepaid company credit, which they used to purchase gift cards. This scheme caused significant financial losses for Uber Eats and undermined the integrity of their platform.

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PayPal Promo Abuse Controversy

PayPal has faced multiple controversies related to promo abuse. In 2022, PayPal had to shut down 4.5 million accounts and also signifiacntl;y lower its forecast for new customers after they discovered their cash incentives for new accounts were being abused for months! 

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How can Bureau be the wooden stake for these vampires? 

To successfully abuse coupon codes, a fraudster typically follows a series of deliberate steps designed to exploit promotions meant for legitimate customers.

First, they would sign up multiple times, often using the same device but creating several accounts to bypass "new user" restrictions. Fraudsters may also install cloned versions of the same app on a single device, allowing them to repeatedly claim discounts meant for first-time users. 

In both cases, a persistent device ID becomes a powerful tool in detecting promo abuse. A persistent device ID remains intact across app reinstalls, cloning, factory resets, and various device manipulations, making it possible to track and flag users who repeatedly engage in these tactics from the same device. 

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Bureau’s advanced Device Intelligence and Behavioural AI goes beyond device ID tracking by incorporating other key signals to identify and prevent promo abuse:

‍- Geolocation identifiers: By analyzing geolocation data, Bureau can detect if multiple promo codes are being redeemed from a suspicious location, such as a device farm, which is a clear sign of coordinated abuse.

- IP address identifiers: Tracking IP addresses helps identify patterns where multiple codes are being redeemed from the same network, indicating potential abuse.

By leveraging these robust signals, Bureau ensures that businesses can effectively detect and prevent promo abuse, preserving the integrity of their promotional campaigns and safeguarding their bottom line.