Coupon Scams: How To Spot & Prevent Fraud In 2025

Coupons help shoppers save money, but they also provide opportunities for scammers to exploit loopholes in the system. Coupon scams have surged in recent years, leading to significant financial losses for businesses and manufacturers. Fraudsters use various techniques, including counterfeit coupons, misuse of high-value offers, and illegal coupon stacking, to deceive retailers and gain unauthorized discounts.

Some even create fake barcode coupons to manipulate pricing systems. Retailers must stay vigilant and educate their staff on detecting fraudulent activity. Shoppers should also be cautious when sourcing coupons, ensuring they only use those from legitimate sources. Understanding these scams and taking preventative measures can protect both businesses and consumers from financial harm.

What is a Coupon Scam?

A coupon scam occurs when individuals or groups manipulate discount codes, vouchers, or promotional offers to gain undue benefits, often at the expense of businesses. This type of fraud can manifest in various ways, including unauthorized distribution on third-party websites, code stacking where multiple discounts are applied simultaneously in unintended ways, and automated abuse through bots that rapidly test and redeem codes.

According to a report by the global news agency on online payments, coupon fraud costs businesses over $600 million annually in the U.S. alone. Such activities undermine the integrity of promotional campaigns and lead to financial losses, inventory issues, and a negative impact on genuine customer experiences.

What Are the Common Types of Coupon Scams?

Understanding the different types of coupon scams can help you identify and prevent misuse before it hurts your bottom line. Here are some of the most common types:

1. Counterfeit Coupons

Scammers make their fake coupons that look better than real ones but give you unauthorized discounts. These coupons are often shared digitally via social media accounts, forums, and coupon-sharing sites. Fraudulent coupons are made to look like real ones, making it hard for businesses and even customers to distinguish between them.

2. Coupon Code Abuse

Digital coupon codes are easy to be abused by fraudsters. They may also use bots to crack codes or post exclusive codes designed for one time use across multiple accounts. Some users also take “welcome discounts,” creating various new accounts to reuse first-time buyer promotions.

3. Stacking Coupons Illegally

Some shoppers will use multiple coupons at once when that’s not allowed. Although certain retailers permit stacking, fraudsters are taking it further by stacking counterfeit or expired codes, resulting in significant fraud cases for merchants.

4. Reselling Coupons

In some cases, fraudsters buy discounted coupons in bulk and resell them to customers for a profit, which violates the terms of most coupon programs. Some even generate fake barcodes or alter existing ones to get higher discounts.

5. Multiple Account Fraud

Some customers create multiple accounts to take advantage of one-time-use coupons repeatedly, leading to revenue losses. This applies to popular referral programs when fraudsters generate fake referrals for which they get many bonuses.

How Coupon Scams Take Shape

Coupon scams aren’t always a simple case of someone printing an extra coupon at home. Many scams are well-organized and take advantage of loopholes in store policies or digital coupon systems. Here’s how these coupon frauds typically unfold:

1. Organized Groups

There are  networks of scammers who share fake coupons online or via emails, selling them in bulk to unsuspecting purchasers under the impression they’re landing a real deal. These groups are frequently transnational and employ advanced techniques to avoid law enforcement. They may even enlist people to redeem fake coupons in-store and split the proceeds from the scam.

2. Social Media & Dark Web Exchanges

Fake and counterfeit coupon codes can be bought and sold on dark web marketplaces or traded in private social media groups. Fraudulent sell fake coupon bundles via encrypted messaging services or use leaked company promo codes. Some even employ social engineering tactics to convince customer service representatives to issue them new coupon codes manually.

3. Automated Bot Attacks on eCommerce Sites

Some scammers use bots to test through numerous coupon codes on e-commerce sites, finding glitches in the system and stacking unauthorized discounts. These bots work quickly to test thousands of code combinations to find ones that are still active or unprotected. If a vulnerability is identified, scammers can then abuse this at scale before businesses identify fraudulent activity.

4. Insider Fraud

Some businesses may have employees that are actually intentionally committing fraud if they are involved in generating discounts or committing fraudulent transactions to the business. Employees might exploit lax oversight to apply their discounts, double up on customer coupons or share unauthorized promo codes. To avoid being hijacked internally, firms should introduce monitoring systems and audits.

5. Coupon Stacking Exploits

Some scammers exploit loopholes in a store’s coupon system by stacking several discount codes together when the policy permits only one. That can include stacking manufacturer and store coupons unintendedly or finding system errors that don’t correctly restrict the number of applied discounts. Fake Refund & Exchange Schemes

Another strategy uses counterfeit coupons to buy something and then return it for a full-price refund. Scam artists sometimes take advantage of the return policy by receiving cash instead of store credit, successfully transitioning fake coupons to actual currency.

Tips for Avoiding Coupon Misuse

Preventing coupon scams requires a combination of smart policies, digital tools, and employee awareness. Here are some effective ways to protect your business:

1. Set Clear Coupon Policies

Make your coupon terms and conditions absolutely clear. Vague coupon policies can lead to unintentional misuse and fraud. State all the required restrictions as clearly as possible to avoid any loopholes that fraudsters may take advantage of. Customers must understand precisely how, when, and where they can redeem your coupons; otherwise, confusion may result in unauthorized usage. Clearly state:

• Expiry dates
• One-time use restrictions
• Whether stacking is allowed
• Minimum purchase requirements
• Specific product eligibility

2. Use Unique, One-Time Coupon Codes

Generating unique, single-use promo codes at the time of purchase is one of the best solutions against coupon fraud. When businesses use generic or reusable codes, fraudsters can take advantage of them through sharing or automated bot attacks.

Codes that expire after a certain period and account limitations can significantly reduce the exploitability of codes. Using a system that links coupon codes to individual customer accounts also protects your bottom line by ensuring that only the target recipient can redeem them.

3. Implement Fraud Detection Tools

Use AI-powered fraud detection software to monitor and flag suspicious coupon activity in real time. These tools analyze patterns like too many redemptions by the same user, unexpected bursts of usage, or too many redemptions from different accounts linked to the same IP address.

Advanced fraud detection systems can automatically block fraudulent redemptions and alert businesses to potential scams before they cause financial damage.

4. Monitor Coupon Code Usage

Conducting regular audits of coupon redemptions helps businesses in spotting any abnormal or fraudulent behavior. Look for patterns like excessive redemptions from a single location, spikes in coupon use in a short period, and cases where discount codes are being redeemed by those not intended. Setting up automated alerts for suspicious transactions allows quick intervention before fraud escalates.

5. Limit Coupon Sharing

Limiting coupon availability to verified accounts ensures that only real customers can redeem them. Implementing security measures like confirming the user’s email or phone number or even requesting an MFA (multi-factor authentication) for higher value discounts.

Moreover, organizations can utilize dynamic coupon tracking, where each coupon code is assigned to a unique customer to avoid unwanted sharing and abuse.

6. Educate Your Employees

Employees play a crucial role in preventing coupon fraud. Educate your employees about fraudulent practices, including how to spot fake coupons, unauthorized employee overrides, and suspicious redemption behavior.

Impose strict internal policies for coupon handling and ensure that employees understand the consequences of abuse. Regular training sessions and real-life fraud case studies can help employees stay vigilant.

7. Work with Secure Couponing Platforms

Implementing secure digital coupon platform, like 99minds, can help businesses prevent fraud with advanced tracking, verification, and redemption controls. These platforms provide real-time fraud detection, automated restrictions, and seamless integration with existing sales and loyalty programs.

With features like geolocation tracking, customer behavior analysis, and transaction monitoring, secure couponing platforms introduce an additional level of protection to scams, preventing discounts from being handed over to anyone but genuine customers.

Conclusion

Coupon scams are a growing problem, but they don’t have to be a nightmare for your business. By understanding different types of coupon fraud and taking proactive steps to prevent misuse, you can safeguard your discounts while still providing great deals to genuine customers. Implementing robust verification processes and utilizing technology to track coupon usage can significantly reduce the risk of fraudulent activity.

At 99minds, we help businesses like yours manage and protect their coupon and loyalty programs with advanced fraud detection and secure digital coupon solutions.