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Prevent Coupon Fraud in Hospitality

Preventing Coupon Fraud in Hospitality

In this day and age almost every consumer facing business has deployed some type of coupon campaign in order to build revenue, introduce new products, acquire new clients or to reward loyal customers. So in essence the business is trading the coupon offer in for something in return from the customer. This has worked really well, but the fact of the matter is that your business may be losing millions of dollars in these efforts and you may not know it.

For the last 20 years I have seen many scams when it comes to stealing money from a business. Employees are so innovative when it comes to figuring out how to take advantage of a Point of Sale system. Whether you are running a large operation with multiple profit centers or a small “mom and pop” you are bound to become a victim of employee theft.

Theft can present itself in many different ways, but one of the most devastating forms of theft comes by way of fraudulent coupon redemptions. According to the Association of Certified Fraud Examiners; the median loss for businesses was $160,000 and nearly 1 quarter of all fraud cases cost the business at least $1,000,000. On average, scams that were detected lasted an average of 18 months before the perpetrators were caught. Not too long ago I worked at a casino where a mother and daughter had teamed up on a Buffet discount scam and they were caught after working there for 3 years. Nobody really ever knew how much they stole, but estimates were in the 6 digit range.

The most common version of coupon/discount fraud comes from the employees who collect coupons and then apply them to a transaction in which the customer pays 100% of the check with cash. Recently I heard a story from a friend who worked at a very popular restaurant chain, she mentioned that she saw co-workers who would buy as many newspapers as they could so they could cut out the coupons and take them to work and apply them to cash transactions and pocket the difference. Apparently there were many individuals including managers who had conducted this type of activity. This is the new secret profit sharing system that you didn’t know existed.

Now that you’re all riled up, I want to share some good news with you. There are great ways to drastically reduce this type of theft in your store/restaurant. Most casinos run either Micros or InfoGenesis POS and there are companies like SkyWire Media who have integrated a coupon clearing house to their systems to help validate all coupons that are redeemed. These systems use unique coupon ID’s to isolate the individual coupon from one another, giving you the operator specific data on the individual the coupon was sent to with safeguards making it extremely difficult to tamper with or counterfeit. Nothing is foolproof, but there are tools that exist which make theft very difficult, reducing the amount of money your company may be losing.