How AI Can Eliminate Coupon Frauds
E-commerce companies are turning to AI, which is proving to be a strong business partner that protects from cybercriminals and online coupon fraudsters.
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The use of online coupons and vouchers has changed the outlook on online shopping. Sighted rarely a few years ago, digital coupons have become an integral part of the eCommerce industry. Whatever website or application you are using, whether it is an online mart or an appliance store, a restaurant or an online boutique, these vouchers will greet you everywhere.
The purpose of these vouchers is to increase customer traffic on the company's websites and applications. These coupons are used by e-commerce websites to attract more people to their websites and download their mobile apps. Discounts are given on placing the first orders, referring to friends, and many more other ways to make the users their permanent customers.
What is a Coupon Fraud?
It’s estimated that 90% of consumers use coupons, and the popularity of this practice has attracted a number of shady individuals to this practice. Some fraudsters use fake coupons to fool naïve consumers. Within the past couple of years, millions of consumers have fallen trap to these fake coupons and have put their sensitive information at stake. But with the advent of artificial intelligence technology, it is easier to detect fake coupons.
It’s not just the customers who can be affected by coupon scams. Sometimes, consumers misuse coupons by trying to redeem coupons multiple times. As a result, companies fail to achieve their goal, which is attracting more customers and increasing their sales.
In this article, we are going to share how AI is making it easier to detect fake coupons.
Common Forms of Coupon Frauds
Although the use of promo codes, vouchers, and coupons has certainly increased the revenue of these e-commerce websites, there is also a negative aspect that comes in the form of coupon or voucher fraud. Voucher fraud usually occurs when a person or agency tries to take advantage of your offers by abusing its policies. They could redeem the voucher multiple times, make fake accounts and IDs to avail of the promos again and again, or hack the promo codes system. Fraudsters and cybercriminals have been using advanced techniques to exploit vouchers and coupon codes.
Below, we break down different types of voucher frauds.
Referral discounts are a great incentive to attract new customers by giving promos and discounts whenever your user suggests your application to a friend. But some users could exploit these discounts by creating multiple accounts on your application and redeeming the offer again and again.
Cart Abandonment Voucher
Some users might see a pattern of receiving promo codes and coupons whenever they empty their carts without making the actual purchase. Some users would do that every time they make a purchase, to avail as much discount as they can.
It is common for online businesses to provide customers with apology vouchers and coupons whenever someone complains about a product or their service. Some people might abuse this and keep sending fake complaints and calls to avail discounts.
Hacking Into Promo Codes System
Another serious type of coupon fraud is hacking into the coupon code system. With a six- or four-digit coupon code, there could only be a finite number of combinations. And getting into the system once will make it even easier to figure the combinations out.
How to Avoid Coupon Fraud
The fake coupon activity has been doubled and tripled within the past few years. It is growing on such a large scale that now there are websites that generate content in the favor of voucher abusers and facilitate and encourage them to do so by teaching them new methods. Coupon fraud is a great concern these days and it is causing a loss of over $100 million each year.
With your e-commerce website available to a large audience, it is quite impossible to monitor every single voucher manually. It requires hiring an additional workforce that is not at all economical and it also requires a lot of time. Then how can we save our online business from fake coupon fraud while preserving the trend of promo codes and coupons? That’s where AI comes into play.
AI Comes to the Rescue
AI has been playing a pivotal role in detecting online frauds for many years. AI has rapidly advanced in the sector of fraud detection. It combines a large amount of data and processes specific algorithms by using iterative intelligence. This allows the software to learn from the features and patterns in the data it has processed previously and enables it to make decisions on its basis.
The best features of AI are the continuous autonomous anomaly detection. The machines continuously work to find any changes in the pattern of behavior it has developed. AI can analyze data within milliseconds and identify complex patterns. Even the most skilled of the fraudsters are weak in front of the walls AI could build around your online businesses.
How AI Helps to Prevent Coupon Frauds
The algorithms for AI are specifically designed to protect the website against any kind of fraudster behavior. These algorithms are associated with all the transactions and activities related to promos and vouchers. AI can make a distinction between fake or real coupons by running them through the database and figuring out the pattern. During the analysis, they figure out the person’s details like:
- Phone number
- IP address
- Pin code
By gathering this kind of information AI can process whether the coupon being used is original or fake. It can save the person’s data for future use. When a person with the same number, ID, address, or pin code tries to redeem a coupon that he has used before with a different account, the algorithm will detect it, send a signal to AI, and it will automatically terminate the request to use the coupon.
AI involves machine learning (ML) for the prevention of fake or counterfeit coupon fraud. Machine learning uses methods from neural networks, operational statistics, and physics to figure out the hidden details in the data and use these details to make a decision in the next operations.
AI’s Influence on the E-Commerce Industry
Artificial intelligence has totally revolutionized the e-commerce industry within a short period of time. AI has been helping e-commerce websites to learn the interests of their customers and help them provide more products according to their tastes.
The seller-customer relationship has never been better, all thanks to an intuitive chat box that provides the user all the information regarding the products, offers, and coupons. These chat boxes are available to users 24/7 and reply to them usually within seconds. This saves a lot of manual work and alleviates a lot of slack from workers.
The use of AI takes care of repetitive tasks and helps you focus on other parts of the job that require human intervention. This will save you a lot of time and effort and will help your business grow and prosper.
In the field of e-commerce, it is extremely difficult to survive without artificial intelligence. AI has proved itself time and again to be a strong business partner to not only save your time and efforts but also to protect you from cybercriminals and online coupon fraudsters. In this article, we have accentuated the importance and benefits of AI in e-commerce. Now it is up to you how you learn from these facts and make your business safer and more successful.
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