Top 7 Strategies to Combat Discount Abuse in Your Shopify Store

Coupons and promotions are excellent means of boosting sales. Discount abuse, in the meantime, might cause problems for a Shopify merchant like you. Promotional misuse across markets has increased by 17%, according to Ravelin’s 2024 Fraud & Payments Survey. The poll compiled information from 1457 experts in fraud and payments worldwide. That means things are getting worse.

Some customers abuse discount codes by redeeming them multiple times or unlawfully combining offers. To prevent this eCommerce fraud, clearly state discount policies. Track discount redemptions and change campaign parameters should misuse be found. Read this page to learn more about discount abuse and how to be ready to stop it.

What is Discount Abuse?

In e-commerce, customer discount abuse involves the illegal and unethical use of discount campaigns. It could sometimes result in unjustified benefits or losses. This kind of abuse is one form of eCommerce fraud. It can compromise fair sales policies and reduce the profitability of the retailer. Here are common forms of discount abuse – 

1. Coupon/ Promo Code Abuse
2. Stacking Discounts
3. False Claims of Product Defects
4. Repeated Returns After Discount
5. Fake Reviews to Claim Discounts
6. Using Fake Accounts or Multiple Accounts
7. Abusing Loyalty Programs

Form#1 Coupon or Promo Code Abuse

Customers use multiple promo codes or share them widely. The intention is to gain more discounts than intended. This includes using expired or unauthorized codes.

Form#2 Stacking Discounts

Using more than one discount or offer on the same product at the same time. For example, you offered a site-wide discount. You also gave a product-specific discount with a specific product. If customers use both discount offers, it will lead to massive reductions.

Form#3 False Claims of Product Defects

Customers might claim a product is defective or damaged to receive a discount or full refund, even when the product is fine.

Form#4 Repeated Returns After Discount

Clients buy discounted items and return them after the discount period ends. Sometimes, they repeatedly return discounted products while retaining the discount benefits.

Form#5 Fake Reviews to Claim Discounts

Some customers may write fake or exaggerated reviews to claim rewards or future deals offered for leaving reviews.

Form#6 Using Fake Accounts or Multiple Accounts

Creating fake or multiple accounts to claim first-time buyer benefits or access limited-time discounts repeatedly.

Form#7 Abusing Loyalty Programs

Abusing reward points by manipulating the system, like signing up for a loyalty program only to redeem the rewards and immediately quitting.

How to Combat Discount Abuse With 7 Strategies

Discount scams can be a significant issue for Shopify store owners, potentially leading to revenue loss and inventory depletion.

1. Implement Unique Discount Codes
2. Use Discount Eligibility Criteria
3. Set Order Minimums
4. Monitor Order Patterns
5. Add Captcha For Discount Access
6. Enforce One-Time Use Policies
7. Regularly Audit Discount Campaigns

Implement Unique Discount Codes

Scammers may share generic discount codes widely, leading to abuse.

Unique Codes for Individuals: Generate personalized discount codes for specific customers or campaigns.

Limit Usage: Set the discount code to be used only once per customer or per email address.

Expiration Dates: Include expiration dates to limit the validity of the codes.

Use Discount Eligibility Criteria

Scammers might create fake accounts to exploit discounts repeatedly.

Customer Verification: Require account creation or login to apply a discount. It’ll be easier to target a specific customer base. A discount app from Shopify store can make things easier.

Purchase History Requirements: Create personalized discounts. Offer discounts only to returning customers or those with a minimum purchase history.

Exclude High-Risk Locations: Restrict discounts for regions prone to fraud unless the customer is verified.

Set Order Minimums

Scammers may exploit high-value discounts on low-cost products to maximize profit.

Minimum Purchase Amount: Put product and variant restrictions. Require a minimum cart value to apply a discount (e.g., “10% off orders above $50”). You can use the bulk order app from the Shopify app store.

Exclusions: Exclude specific items or categories, like sale items, from further discounts.

Monitor Order Patterns

Scammers often place multiple small orders to exploit loopholes in discount policies.

Flag Suspicious Activity: Use Shopify apps to monitor unusual patterns (e.g., many orders from the same IP or email address).

Review Large Discounts: Manually review orders with significant discounts or unusually high quantities.

Add Captcha for Discount Access

Bots can exploit publicly available discount forms to generate fake orders.

Captcha Verification: Use Google reCAPTCHA or similar tools on discount forms to ensure only humans can access them.

Access Limits: Restrict access to discount code pages to logged-in customers.

Enforce One-Time Use Policies

Scammers might reuse or share single-use codes.

Shopify Settings: Use the discount code settings to allow only one-time use per customer.

IP/Account Restrictions: Block multiple uses from the same IP address or customer account.

Regularly Audit Discount Campaigns

Over time, outdated or forgotten discount codes might remain active and vulnerable to misuse.

Deactivate Old Codes: Periodically review and deactivate expired or unused discount codes.

Audit Campaign Effectiveness: Evaluate which discount campaigns drive genuine customer engagement versus those prone to abuse.

The Hidden Costs of Discount Abuse: Why You Need to Pay Attention!

1. Loss of revenue
2. Compromised fairness
3. Unpredictable profit margins
4. Overburdening systems
5. Brand devaluation
6. Increased fraud risk

Reason#1 Loss of Revenue

Discount abuse can lead to significant losses. You may give away products at a much lower price than intended. This eats into profit margins and harms the business financially.

Reason#2 Compromised Fairness

It creates an unfair shopping environment for customers who follow the rules. This may lead to frustration and a sense of unfairness.

Reason#3 Unpredictable Profit Margins

Overusing discounts and codes can make sales unpredictable. Forecasting revenue and setting sustainable pricing strategies might become more challenging.

Reason#4 Overburdening Systems

Fraudulent activities can overwhelm customer support teams. You’ll need extra resources to tackle refunds, returns, and customer disputes.

Reason#5 Brand Devaluation

If customers know they can easily abuse discounts, it can diminish the perceived value of the products and the brand itself! It’ll be more challenging to sell items at full price later.

Reason#6: Increased Fraud Risk

Frequent discount abuse could lead to more malicious activities, such as hacking or other fraudulent actions, that go unnoticed until it’s too late.

Conclusion

Running a Shopify bulk order discounts campaign isn’t easy. While discounts help bring in customers, they can also be misused. Discount abuse might seem small. However, over time, it can eat into your profits and hurt your business. The good news? You can stop it with simple steps—set clear rules, watch for unusual patterns, use fraud protection tools, etc. At the end of the day, your discounts should work for you, not against you. A little caution now can save you a lot of money later. So stay smart, protect your store, and keep your profits where they belong!

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