Promotion Abuse

Users create multiple accounts to take advantage of free promotions using fake identities, different IP addresses, or simply repeatedly signing up to access these gifts and bonuses. For example, a customer can create multiple accounts to access a subscription-based streaming service for free repeatedly instead of actually paying for the subscription once their free trial ends. 

A referral program is a system for existing and potential customers when current users invite new ones and, this way, access benefits, such as a discount or store credit. In the context of promotion abuse, customers can create multiple fake accounts, which can then be used for referrals linked to the primary account. Once that happens, bad actors use stolen credentials and payment details to make new purchases, and if that happens, businesses are often left to deal with chargebacks from genuine customers who had their personal data stolen. 

Voucher abuse happens when a customer predicts simple and easily guessed discount codes, allowing them to access multiple offers. Sometimes, this closes the door on genuine customers with good intentions who no longer can access the vouchers due to the business losing profits. This is similar to coupon fraud in terms of the fact that the voucher is misused to drive more value from a promotion.

The key reason why no business wants to deal with issues like promo abuse is the direct financial losses it comes with. While it’s a good tool to attract new clients, such bonus systems can benefit fraudsters who misuse them for their own benefit. For example, online gambling and casino platforms are particularly vulnerable to promo abuse, which often escalates into other schemes. Banned users can create new accounts or engage in account takeovers to regain access and continue exploiting the platform.

Yes, minimizing the number of promotions that you offer or reducing the bonus payments can help prevent this type of illegal activity simply because fraudsters won’t find your platform so appealing. That means it’s best that you monitor account activity and balance the number of promotions that you offer as a precautionary measure. 

Promo abuse is tightly associated with duplicate accounts, which means that it can be prevented by implementing stronger authentication measures, such as government ID verification. While this method is a more complex process for the end user, it’s highly effective since AI algorithms can detect document forgery and prevent fraudsters from creating numerous accounts and engaging in promo abuse. Other fraud prevention tools like suspicious IP detection solutions also help detect shared accounts.