How to protect your business and consumers against fake discount code sites and fraudulent affiliates
This guide will provide a comprehensive methodology for dealing with fake discount or coupon code operators targeting your business. We'll start by defining the problem, discussing the risks they pose to your company and consumers, how to identify them, take action against them, and protect yourself from being targeted again.
Why do businesses use discount codes?
Throughout the guide, we'll interchangeably use the terms coupon, discount, voucher, and promo code. They all mean a code a business offers its users, who can redeem it for a benefit. These codes are extremely widely used, with roughly 770 million codes used in 2022, and 90% of Americans admitting to using them. They have a variety of use cases:
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Offering monetary benefits to incentivise customers to shop, book or sign up. This can be targeted at specific demographic groups businesses try to attract or around particular times of the year, such as Black Friday or busy sign-up periods.
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Collecting data on customer behaviour. By tracking coupons used in online or offline sales, businesses can attribute value to a particular marketing campaign or see how a group responds to a promotion. Physical coupons can be used on channels such as direct mail, to track performance where it would otherwise be very difficult.
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Selling unused inventory. Discount codes are often used on particular products or capacities a business has. For example, a code might be offered to create sales for a brand that will no longer be stocked or fill seats on an empty airline route.​
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Coupon codes offer a flexible way to stimulate demand and, via online coupons, a quick, low-barrier entry to the market that teams can use. Unfortunately, their widespread usage has led to many coupon scams.
Coupon Scams: A definition
We define coupon scams as someone using a fake, stolen, or invented coupon to attract targets they can use to profit via deceptive means. The objective of the coupon scam is usually one of two things.
Using fake coupon sites for affiliate marketing fraud
These types of coupon scams are by far the most common that we deal with at Marcode. Affiliate marketing has an estimated market size of $13.4bn, with anywhere between 15% and 30% of this estimated to be fraudulent. Fraudsters have a significant opportunity to make money, and voucher codes are a core technique used.
A fake affiliate coupon website
We see many fake coupon websites being used for affiliate marketing. These take advantage of the huge volume of people searching for discount codes, with studies finding that 50% of US shoppers used search engines to find them. While legitimate coupon sites like RetailMeNot or VoucherCodes work with brands to help users discover promotions, affiliate fraudsters build fake sites to capture as many people looking for a particular discount code and monetise them as possible.
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The site's purpose is to get a user to click on anything; at this point, they will be directed to the merchant site with affiliate details added. These details then entitle the affiliate to a % of the sale, regardless of whether they use the code. These fake sites often use Google Ads to capture users by paying to appear against a brand's voucher code keywords. To bring this to life:
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A fake voucher code site might be created targeting Adidas' online store.
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The fake voucher code site pays to appear for keywords such as "Adidas voucher code" in Google Ads, so when I search, I see the ad.
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When I click on the ad and reach the site, I am automatically sent to the Adidas site, where the affiliate's details are added.
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When I buy something from Adidas, regardless of whether the code can be used, that affiliate is credited with contributing to the sale and receives a percentage of the sale value.
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Most brands restrict genuine partners from buying AdWords keywords against branded voucher terms, so this also violates that policy.
How fake sites create their discount coupons
01. Fake codes
These counterfeit websites rely on someone being close to purchasing, so even if the codes don't work, they will still buy and create affiliate commissions. This is simplest to do, as it takes no effort at all, but there is a risk to the fraudster that the sale will be lost when the code doesn't work. This provides a bad user experience for businesses, as the user may believe the company has offered expired codes.
02. Stolen or leaked codes
As brands use discount codes, legitimately, fake sites can often find these and use them for their gain. By featuring codes that work on their sites, they increase the chance of the sale occurring as the customer receives a discount. This is particularly bad for brands as they are paying fraudulent affiliate commissions and losing a percentage of the sale price, lowering their margin as the code means customers don't pay full price. It can also damage relationships with those who run legitimate coupon pages. One of our clients had fraudsters using fake email addresses to generate multiple new sign-up discount codes and featuring these on their fake websites.
Other risks from fake coupon sites
If a user is searching on Google and then using a coupon site, whether real or not there is always the chance they are diverted to another brand as these sites feature multiple brands. To reduce this risk, businesses want to keep users on their site when purchasing.
Affiliates and discount coupon browser extensions
One trick we have seen affiliates play at Marcode is using fake discount sites to get users to install a browser extension that promises to automatically flag codes to users when they are online shopping. Once again, these sites use Google Ads to capture users, and once they have installed their browser extension, they add affiliate details to the user whenever they are on a site about to buy.
Coupon fraud for consumer scams
How coupon code abusers scam customers
Similar tactics to those used by affiliate fraudsters are used by bad actors targeting customers. They will use the lure of fake coupons to trick users in the same way, bidding on a brand's terms in ads or paying for social media ads to get the users to the fake sites. In addition, we also see frequent social media posts promoting these counterfeit sites, designed to look like the genuine brand. From there, they will offer a voucher that can often seem too good to be true to steal some kind of personal data or incentivise the download of something that contains malware.
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We consistently encounter versions of these scams. Some of the most common methods of tricking consumers we observe are:
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Offering counterfeit coupons in exchange for personal details. A very common scam was offering users a spin of a reward wheel or prize draw where they always won and received free coupons for a well-known brand. To claim, they required the users to sign up for an account, which was actually a way of harvesting personal information. The scammers would even design sites to look like the official brands, so users may not realize they weren't dealing with an official entity.
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Incentivising downloads through vouchers. Scammers create sites that offer coupons in exchange for downloading a piece of software such as a VPN. The site design is often purposefully misleading, so users click where they would expect to claim the coupon and only have it download software containing malware.
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Offering coupons to obtain credit card information. Scammers will make it seem like there is a very generous coupon code that requires the user to enter their credit card details to receive cashback or payment.
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These are just a selection of how scammers use codes to get people to share sensitive details; there are many more.
How to stop and prevent coupon fraud?
Cutting off their route to customers and monetisation
Both types of coupon code fraud rely on the scammers being able to get users to their sites. Tracking how they might do this and cutting it off can prevent things from getting out of control. This involves monitoring advertising channels such as Google Ads or Meta, and immediately reporting any malicious websites to the ad platforms so they are removed. The challenge here is that scammers create websites rapidly, and it can be challenging to stay on top of the sheer volume. The scammers may also target their ads away from your company location or demographic, which means you may not even see the ads. This is where a dedicated solution like Marcode helps; by tracking ads around the clock across multiple locations, you can find these sites and get them cut off. For affiliate fraud in particular, the quickest way to stop these fraudsters is to cut them off from your affiliate programme so they don't receive any money or retrospectively cancel the commission on sales they drove. Once again, Marcode provides an automated way to do this.
Educating customers & encouraging reporting
Providing customers with guidelines as to how you offer coupon codes, it can prevent them from falling victim to scams. This could include creating a page that ranks organically for your brand plus discount code search terms and includes:
• Red flags to watch out for
• Warnings to avoid downloading or entering personal information by stating you'd never ask them to do this
Customers should also be encouraged to report suspicious sites that might mimic legitimate coupon providers to scam them.
Monitoring code leakage
Dedicated tools are available to help you monitor where real coupon codes are used across the web. This will alert you to places where coupons might be used without authorisation. From there, you can remove the offending affiliate from the programme or report the sites that offer these to steal personal data to their hosting provider.
Analysing affiliate and coupon redemption data
Keeping a close eye on your own internal data will spot affiliate issues sooner rather than later. If reported revenue numbers from partners look suspicious, they should be challenged to prove they are using legitimate ways of driving this and not fake voucher code sites. We often see subnetworks obscuring their fraudulent activity using fake websites; if the site does not look like it could possibly drive the revenue, they should be challenged.
You can also check the number of coupons redeemed to see if this looks suspicious. If the coupon is being sparingly used for marketing purposes but is being used on a disproportionate number of sales, it will likely be leaked somewhere. This is especially important for your best coupons with the biggest financial offers.
Adding expiry dates to discount codes
By automating the expiry of discount codes you can reduce the risk of them falling into the wrong hands and having them misused. This is important for promotions such as Black Friday sales where traffic and usage are likely high. If people attempt to use codes long after their expiration date, it might indicate the presence of fake sites using these.
Automating brand bidding
Devising a brand bidding strategy can be a complex undertaking. Marcode allows you to automate this with our Micromanager product. This uses our data to enable you to create rules to activate or deactivate ads. These are completely customisable and include:
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Organic positon
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Competitors present
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Type of ads competitors appear in
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Number of competitor ads
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Location of competitor ads
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Time of day
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Day of week
This will ensure your ads show when you want them to, but it will also save you money when there is no competition and someone already familiar with your brand is searching. This also automates reacting to increased competition far quicker than manual analysis.
Conclusion
Fake discount code sites are a menace to brands, with impacts ranging from letting scammers make money through affiliate commissions to scam websites that steal personal and financial information from customers. Following the information in this guide can protect your business and customers. Get in contact for more information on how Marcode helps stop voucher code abuse.
