Preventing Promotion Abuse: How to Leverage User Loyalty and Customer Acquisition This Year

Innovations in frictionless-yet-secure transactions are becoming increasingly important when it comes to navigating promotions in various industries, a weapon often used to boost customer acquisition and loyalty. An estimated $1.5 million is lost each month by U.S.-based delivery companies attributed to promotion abuse, a type of online fraud in which bad actors take advantage of coupon codes or other sales incentives. The lessons learned from this scam have far-reaching implications for businesses across sectors.

In the competitive landscape of customer acquisition and loyalty, user-friendly apps and tech-enabled networks empower consumers to switch between services for the best incentives. And, among legitimate users trying to benefit from them, these bad actors or fraudsters typically employ multi-accounting strategies across devices in combination with sophisticated device resets to evade recognition, pretending to be new users.

In combination, this means that companies are contending with more data than ever before, necessitating powerful security measures to prevent fraud and promotional abuse, root out bad accounts, and protect valuable customer information. The customer loyalty management market is valued at over 5.5 billion and is expected to surpass $24 billion by the end of 2028. Companies are fighting for a seat at the table. Safeguarding against fraud to eliminate promotion abuse is a critical undertaking to reinforce customer trust, restore growth budgets, and maintain a competitive edge in the market today.

Digging Into the Role of Promotions

Promotions in online services offer a range of benefits, including helping businesses customize their target audience and hone incentives. Research shows that boosting customer retention by 5 percent increases profits by 25 percent to 95 percent. Furthermore, promotional offers provide a cost-effective way to expand customer bases — and poach other customers from the competition.

It’s no secret, however, that fraud can be a real chokehold for businesses, costing them money, trust and valuable customers. As companies crack down on things like loyalty coupon abuse, new user coupon abuse, masked device identification and device emulators, among other behaviors, through the implementation of limits and rules, fraudsters are moving to more sophisticated techniques to operate around restrictions and continue making a profit.

Balancing Convenience With Security

To fight against the nefarious actions of bad actors, the industry must balance convenience with security. And to effectively do so, it must turn to advanced location and device recognition signals to mitigate promotional abuse and fraud. Today, location technology like device intelligence and precise location data stands as a cornerstone in enabling seamless customer experiences while curbing financial losses.

Implementing tamper-resistant exact location tracking and cutting-edge device fingerprinting empowers online service platforms to deliver persistent cross-device recognition solutions. These solutions efficiently identify and thwart popular evasion techniques, including device resets, the use of multiple devices and other tampering attempts. By rooting out systemic fraudulent behavior, the path to mitigate risky activities on delivery platforms is paved.

As companies adjust to the deliberate post-pandemic pace of online services growth, those investing in sophisticated technology solutions will undoubtedly gain a competitive edge. Embracing such innovations doesn’t just signify a commitment to fortifying security; it also underscores a dedication to preserving customer trust and fostering sustainable growth.

André Ferraz is the CEO and co-founder of Incognia, a location identity company that delivers cutting-edge user verification and account security across the digital journey.