Clock icon 5 min read Calendar icon Apr 8, 2024

How to Prevent Receipt and Promotion Fraud


Promotions reward your customers for their engagement and loyalty, and the benefits are well-known. 84% of consumers say they’re more likely to stick to brands that offer a loyalty program, and strategies like receipt marketing have a proven return on investment (ROI) for businesses. But with every well-intentioned promotion, there's an opportunity for exploitation.

What is Receipt and Promotion Fraud?

Promotion fraud, also known as promotion abuse, is when consumers take advantage of your business offers. They might try to use offers or promotions repeatedly, provide misleading data like fake email addresses, or even use other customers’ promotional codes.

Receipt fraud is when customers steal, duplicate, or falsify receipts. This can happen when information on existing receipts is modified, new, fake receipts are produced, multiple people submit the same or similar receipt, out-of-date submissions, and a variety of other ways (AI tools will only make this easier to do).

Promotion fraud and receipt fraud can have a significant impact on your business. For example, PayPal had to shut down 4.5 million accounts in one year after discovering bad actors had hacked their rewards and loyalty program. Activity like this can be costly for large businesses, where even small financial losses quickly add up to large sums when perpetrated by thousands of fraudsters. So, staying aware of fraudulent receipt and promotion activity is important.

Examples of Receipt and Promotion Fraud

  • Receipt fraud: consumers modify information, fabricate images of receipts, make out-of-date submissions, or mislead you by using similar or unqualified product receipts.
  • Promotional codes: predictable, simple, and easy-to-guess promotional codes are prime for the picking. Bad actors try to guess codes to secure an offer or discount, even if you haven’t supplied them with a code.
  • Action-based promotions: whether it’s a sign-up bonus, free trial reward, or referral discount, it’s easy for people to repeat actions multiple times using fake information to receive rewards.
  • Multi-accounting: many businesses restrict customers to a single account. However, some customers will create and use new email addresses to register for more than one account. With this tactic, they can receive and benefit from your promotions multiple times.
  • Gift with purchase: bad actors take advantage of promotional gifts and resell them for profit. They might even return their original purchase.

5 Ways To Prevent Receipt and Promotion Fraud

At Snipp, we’re leaders in receipt processing technology and consumer promotions and contest management, so we take anti-fraud measures seriously. We provide expert fraud detection and prevention solutions so you’re always hot on the heels of bad actors. Here are our best practice security measures to reduce the risks of receipt and promotion fraud in your business.

1. Date and Time Stamps

Receipts should include key information like:

  • Date
  • Time
  • Transaction number
  • Items
  • Item price
  • Location of purchase

Using these fields, fraud detection and prevention systems automatically flag incorrect or suspicious data submissions. Or, flag receipts for manual review if a combination of these fields appear on more than one receipt. 

2. File Structure

In most cases, customers must submit a photo of the receipt to claim a promotion or reward. At Snipp, our automated receipt technology captures info from the EXIF data within the photo file. If the EXIF data matches, our receipt OCR system moves it into manual review where the matching receipt is displayed.

3. Photo Markers

Customer receipt photo submissions have ‘fingerprints’ within the photo. Fraud and detection prevention systems automatically digitize and compare images across the program's image catalog. If there are any matches, they’re moved into manual review, where the matching receipt is displayed.

4. Statistical Analysis

At Snipp, our automated receipt validation technology flags users whose participation rates are outliers. A higher-than-average level of participation will automatically raise concerns. This person might receive a more significant number of rewards than normal, for example. Once flagged, our system marks all customer submissions for manual validation to help maintain compliance.

5. A Holistic Approach

Finally, using advanced machine learning algorithms, you can manage receipt and promotion fraud at both an activation and validation level across multiple channels. Some examples of these different channels include:

Fraud Detection
  • Registration Add-ons
  • Image Fraud Check
  • Fraud Monitoring
  • Fraud Prevention
Email Validation
  • Address Validation
  • Receipt Upload Add-ons
  • Industry Standard Bot Detection Applications
  • Reward Rules
  • 2 Factor Authentication With One Time Password
  • Advanced Registration Checks

What Else Should You Look for to Prevent Fraud?

Beyond receipt and activity data, there are softer fraud indicators to look for.

Patterns of behavior can signify receipt and promotion fraud. Fraud detection and prevention systems can recognize these patterns. Algorithms observe specific patterns in any campaign, such as a spike in receipts from a specific retailer. A sudden increase in participation, despite no scheduled marketing event, could indicate fraudulent activity. See details about our fraud and prevention systems here.

The Devil Is In the Detail

Bad actors leave a trail of hidden data in their submissions, email and IP addresses, photographs, and more that are easy to spot with the right tools. At Snipp, we help you uncover this data with leading automated receipt technology – you're risk of financial loss from fraudulent activity remains low. Contact us today to get started with our solutions.