7 Ways To Cut Incentive Fraud

By: Kevin Martin
In a meeting I was at a couple of weeks ago, the number one thing people associated with 360 was fraud prevention

It came up in a few conversations about “Hey you guys have that rebate fraud system” or “Your ROI is fraud right”? (Hey, call me anything you like, just don’t call me late for dinner!)

One thing is for sure: the more widely that sophisticated technologies become available to consumers, the more tools that dishonest folks will use to attempt to defraud sales incentives, rebates and really any other programs that offer rewards.

With that in mind, let’s brush up on the top ways that you can reduce incentive fraud in your next campaign:

Drop The Random Audits

Statistically, people bank on a rate of incentive fraud around 2-3% (btw, we have detected up to 14%!). Using the rate of claims for one of our own clients of around 15,000 claims per week and a figure of 2.5%, you are looking at 375 fraudulent claims per week.  Multiply this by the amount of the claims (typically $100-$200 in this case) and you are looking at fraud of $56,250 per week (using $150/claim) if you are actually able to detect the fraud. Of course, to do that you need to look through about 15,000 claims….

Admittedly, this is not very encouraging also, it’s not very solution-minded, so let’s switch this around to proactive steps you can do.  Remember, however unsophisticated your tracking of all of this data may be (a cobbled together Excel spreadsheet is a fine starting point) the main thing is to get started tracking this data.


Start Tracking Serial Numbers

Seriously; this is the most important step you can take. Assuming each piece of physical goods that you are putting into the marketplace has a unique identifier of a serial number, it is relatively simple to start associating the serial number with each dealer, each customer and subsequently, each rebate you process.

Require A Copy Of The Invoice

This is kind of a two-parter, admittedly. Step one is to make sure that people are submitting copies of the store invoice with all incentive claims, whether it be sales spiffs or rebates. Step two: make sure you are doing something with your copy. What data can you gather from every single invoice copy you receive that will serve to validate your rebate processing? (hint: some of that data is coming right up!)

Keep An Eye On Store Invoice Numbers

Once you start to have a baseline of data from your dealers, you start to have an idea what the logical flow of store invoice numbers looks like. Does the one on the claim in front of you fit into this logical flow or does it look like it should be from 2 years ago? Does it look like it should be from a claim someone will be making 18 months from now? Out of place invoice numbers a great indicator that the facts of this claim needs a closer look.

PaducahTrack The Zip/Postal Code

Bump the purchaser’s zip or postal code up against that of the store they made their purchase from.  “So, Mr. Smith; your paperwork indicates to me that you bought this dishwasher in Paducah, for installation in your home in Honolulu?” If you are deciding whether or not to approve this rebate claim, you might want to flag it for audit.

The Name Game

We call this one the name game because it’s fun to watch people try and commit fraud while at the same time ensuring that the checks they receive can be cashed. Hey John Smith, we’re onto you and your buddies Jon Smith, John Smyth and Mr. J. Smith who all bought the same dishwasher with the same serial number.

A Watchful Eye Is A Valuable ResourceHuman Eyes

If you can segment the reporting of your rebate processing by territory, it is hugely valuable to run those reports by your field sales managers. They should already be familiar with the names who are showing as the top performers for your incentives campaign as it tends to be the same people in each store who are the top performers month after month.  If someone unfamiliar to your FSM is at the top of the pile, the FSM needs to get to know that person anyway, as the person should be their new best friend at that dealership.  If in that process it turns out that the person isn’t really the top salesperson and that they are just the top fraudster, everyone still wins except the bad guys.

These are, of course, kind of the macro look at these steps.  If you’d like a bit more detail I’d suggest downloading our e-book Fraud: The Most Overlooked Opportunity. It discusses these steps in greater detail and contains a fraud reduction worksheet for those of you who may be in the planning stages of a campaign.

Get It Free Now!

If you want to discuss further, feel free to email me kmartin@360incentives.com I love this topic so much, I think I should have been a crime-fighting super hero.  If you shudder at the thought of me in a Spider Man costume, I do happen to also sell software that automates much of this for you.

Kevin Martin 360 IncentivesKevin Martin is a Sales Channel Incentive Specialist at 360incentives.com.   Connect with him on LinkedIn right here.