Decreasing the risk of fraud in your incentive programs

March 7, 2014 Deb Broderson


Chuck Foster, VP of Development

Fraud preventionFraud has been a trending topic in the news recently.  Aberdeen has written any number of articles about it and it’s a continual business challengeWhile fraud in business is much broader than what happens within your incentive program, this is an area with a significant risk of fraud, depending upon the program type and payouts.  Not all of these ideas will apply to your business, but should provide you some ideas about mitigating potential fraud.

Fraud reduction ideas

Multiple browsers:  Consider a change that blocks a user from placing multiple orders at the same time.  When a user places an order, put that user’s ID in a list and keep it there until the order has been confirmed.  If the same user tries to place an order while their ID is in that list, halt processing on the order and display a message to the user informing them that they may only place one order at a time.

Account holds: If a user tries to redeem too many times within a 24 hours period, consider placing a hold on their account until someone can go in and verify their activity.

Block  orders with the same email, from different accounts:  When the email address of an order is the same for multiple accounts,  block (or put on hold) the order.  This way, when someone tries to redeem out of another account, they receive an error that the email address, is already in use by another account.

Pending orders: Consider canceling pending orders after a certain period of time and then return those points to the users account.

Delay orders being placed: Think about placing a delay on order processing, for 24 hours or more.  This additional time may be needed to ensure that no fraudulent activity has occurred.

IP Address Report: When running a consumer program,  pull a daily report ran to show multiple accounts that have redeemed from a single IP address.

PayPal Fraud: If PayPal is a payment option, you may want to investigate situations where a fraudulent user could have hacked an account.  Look for orders where the PayPal email address has been used by more than 3 distinct users. Pull from that list, orders where the PayPal email address (or obviously similar PayPal Email address) is being used more than once in the list of currently pending orders.

Serial (or order #) number checking: If a serial number or order number is required as part of your program, there should be some initial checks done for duplicates and numbering schemes.

What you implement will change, depending on the  structure of your incentive programs and your target audience,  but hopefully this information helps.

Tell us,  what are you doing to minimize fraud?


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