Meta description: Want to cut down on costly coupon abuse on your Shopify store? Read our complete guide to detecting and preventing this drain on your profits.
Coupons have long been a popular and effective method of enticing customers to try a new product or service.
And for just as long, less ethical members of the public have looked to game the system for their own illegal gain. Loopholes, counterfeiting, theft, you name it.
If you’re a Shopify merchant wanting to protect your business and your bottom line, this guide will tell you exactly how you can spot the abuse and stop it.
What is Coupon Abuse?
Coupon abuse is committed when individuals use coupons or promotions offered by a company or commerce platform to get discounts under false pretenses.
Online coupons have conditions that dictate when you can use them, which products you can use them on and how many times you can use them. If you don’t comply with these conditions, you are using a coupon fraudulently.
The most common types of abuse are:
- Multiple/duplicate coupons
Customers who use more than one coupon for a single item.
- Stolen/re-sold coupons
When someone other than the coupon’s rightful recipient uses it- either because it was stolen or sold.
- Counterfeit coupons
Scammers who create fake coupons based on existing coupon templates.
- Float abuse
Coupons used to purchase items, which are then returned for a full cash refund.
These are just some of the more popular detected abuses, and they share one thing in common- it’s your profit margins that take the hit. And a considerable hit it adds up to be…
The Impact of Ecommerce Fraud on Shopify Merchants
Ecommerce fraud is a huge problem for people who sell products via platforms like Shopify.
And part of the problem is actually public perception.
Coupon abuse done on a less-industrial scale is seen as a ‘life hack’- just the due diligence you do before you purchase, to get yourself the best possible deal.
The thing about is perspectives? There is more than one.
And while single customers pat themselves on the back for a wily purchase, the impact these actions, en-masse, have on the vendor is rarely given a second thought.
Larger businesses can take the hit, with security in place to tackle abuses more readily- smaller vendors are not so lucky. They’re already fighting against the economies of scale from their larger competitors; now, coupon abuses can drive up the cost of their customer acquisition (CAC) or even scare them away from utilizing this pricy marketing tool.
This way, everyone loses; the ecommerce business, their honest prospects, and their recurring customers.
Luckily, there ARE ways to distinguish legitimate coupon uses from fraudulent ones.
How to Detect a Coupon That is Being Abused
With coupon fraud becoming increasingly commonplace, it can be difficult to detect a coupon that is being abused.
However, if you know what to look for, you’ll be able to tackle the abuse straight away and minimize the damage.
Some of the easiest ways to detect coupon abuse are:
- Using analytics tools, such as ‘Tracking Coupon Codes’ in Google Analytics to detect suspicious activity on your website.
- Reviewing how many times a coupon has been redeemed.
- Using the range of fraud analytics provided by Shopify’s various plans, such as Shopify Payments, Shopify Plan, and Shopify Plus.
- Looking out for people circulating your coupon codes online- even sporadic google searches for “your store title/product + voucher.”
- Keeping an eye out for customers making lots of orders in a short space of time.
Fraudsters act fast to exploit loopholes, so if anything looks off, you need to get on top of it right away.
Granted, all the solutions listed above require time and effort. However, there are also Shopify apps that detect coupon abuse automatically. I can attest that when we launched Blyp, one of our high-priority tasks was to craft an automatic coupon abuse alert and a thorough guide on fixing it.
If you believe that one of your coupons is being abused by either an individual customer or several customers—immediately limit the usage of the coupon and get in touch with Shopify.
How to Prevent Coupon Abuse on Your Shopify Store
“Prevention is better than the cure,” as they say. Here are the most efficient preventive measures you can take to minimize the chances of fraudulent usage.
The most important thing for your Shopify business is that you have a clear plan for it. Acknowledging the risk and making allowances for it.
Luckily, Shopify gives you a helping hand here, too, providing plenty of guidance and help, so you should be able to implement these fraud prevention features into your ecommerce plan easily.
The State of Coupon Fraud: Just How Much Money is Lost?
The state of coupon fraud encompasses the entire ecommerce space. Proprietary ecommerce platforms (like Shopify) and self-hosted online stores are vulnerable to this hard-to-detect, prove, and punish crime].
It is approximated that coupon abuse accumulates to upwards of $300 million per year– a quite incredible amount of money honest business owners are losing to fraudsters, with prosecutions and recovery rates almost negligible.
Coupon abuse won’t go away, but by taking the steps above and harnessing the power of the community- Shopify merchants are working together for the greater good, to keep on top of the latest scams- its impact can at least be softened.
The Takeaways
Preventing coupon abuse requires constant vigilance of any promotions you may have on your products at that moment. As soon as you notice something that doesn’t seem right, get in touch with a member of the Shopify help team and report it. If it does turn out to be an act of coupon abuse, you’ll have protected your business and the businesses of many other Shopify merchants.
Catching these frauds on time is crucial. The faster you find and eliminate them, the less likely they’ll come back for a second try. So we crafted a special blyp that alerts you as soon as suspicious action is detected. For more info, contact me at hello@blyp.ai.
Coupons are an excellent marketing tactic for attracting customers to your business, but they don’t come without risk. Hopefully, this article has helped you minimize yours.
