Fraud deterred product and service coupons

Details Fraud deterred product and service coupons Fraud deterred product and service coupons

2000-02-28

2004-07-20

Stamber, Eric W. (Department: 2162)

Data processing: financial, business practice, management, or co

Automated electrical financial or business practice or...

Discount or incentive

C235S380000, C235S492000, C235S379000, C235S381000, C705S026640, C705S027200

Reexamination Certificate

active

06766301

ABSTRACT:

BACKGROUND
More and more consumers are shopping “online”, that is through the Internet, because of convenience, wider selection and most of the time, better pricing. Internet is synonymous to a global computer network. This type of marketing has cut the cost of the middlemen. This method of marketing is also favorable to the manufacturers and service providers because they can sell directly to the consumers and retailers without the need of distributors and nation wide warehouses. This increase in online purchasing of goods and services, herein collectively referred to as products, has also created the need for electronic coupons which are provided by manufacturers and service providers to consumers as marketing incentives. Manufacturers and service providers, are also herein collectively referred to as providers. Electronic coupons are similar to the traditional paper printed coupons which are submitted by consumers when purchasing a particular good or service in exchange for a monetary discount in price or a rebate except that electronic coupons are retrieved and/or printed online by consumers and retailers, herein also referred to as users. These coupons typically contain product information, the coupon amount, expiration date, and in some, transaction data such as the number of allowable coupon per user and the total number of coupons allowed for a given promotion, herein also referred to as certificate marks. These certificate marks may be accompanied by other identification data which are printed in numbers, letters, bar codes, combination of these, or other symbols that uniquely identify each coupon, herein also referred to as identification mark.
Printed coupons have been faced with both retailer and consumer fraud, referred to as coupon fraud, which have necessitated the additional printing of unique certificate and identification marks. The exact percent of coupon frauds related to traditional newspaper printed coupons is unknown, because there are only primitive techniques available to suspect potential frauds, with very limited tools and audit trail to isolate the fraudulent activities. Some experts have stated that coupons frauds are about 25%, and most agree that retailer coupon frauds are significantly more of a concern than consumer coupon frauds.
Electronic coupons are expected to experience the same or even greater coupon fraudulent practices because of the convenience of printing several copies of the coupon online by a user. This fear of influx of consumer and retailer coupon fraud have created some resistance in adapting electronic coupons among providers especially those that produce and sell high priced merchandise. Golden, et al. in U.S. Pat. No. 5,761,648 attempted to address this issue by providing an online coupon issuing service which identifies and marks each electronic coupon or certificate with a code distinguishing a particular certificate from all other certificates, referred to as unique certificate mark and another code identifying the user, referred to as unique identification mark. In addition, the data processing system within the online coupon issuing service, limits the total number of certificates to be issued, as well as the number of certificates to be issued to each individual and makes these actual transactions of printing the certificates by the users available in a report form. While the system of Golden prevents some form of coupon fraud, it is ineffective because its traceability ends at the point of printing the coupon. The system of Golden does not provide an efficient system for tracing whether or not an actual use of the product coupon occurred at the point of sale where most of coupon fraud occur. More specifically, the system does not provide an audit trail for tracing a particular sale transaction to a validated sale by a validated consumer. While providing a PIN (personal identification number) identifies a consumer/user and if set-up to do so, the demographics of such user as to location of sale, etc., such security measures only ensure that the coupon is valid and was issued to a consumer/user having an issued PIN. There are no built in safeguards prior to the issuance of a PIN number such as verifying that such consumer is not a fictitious person, that is, it does not tie the provided information such as a credit card number to the database of the credit card issuer or if a bank checking account is provided instead of a credit card, to an issuing bank. Additionally, even if issuance of the PIN is verified with the credit card issuer or the personal check to an issuing bank, a retailer can still gather these legitimate coupons, submit these to the provider for reimbursement without having an actual sale transaction take place. Scanning a coupon before credit deduction from the consumer's bill only protects the retailer in ensuring the validity of the coupon. The PIN does not address the issue when it is the retailer that commits the coupon fraud as stated above. Further, the system of Golden is inapplicable to the traditional paper printed coupon.
A retailer coupon fraud is commonly committed by a retailer submitting several providers' coupon to the provider for reimbursement on non-bonafide sales or fictitious purchases. A coupon that has unique markings, such as that proposed by Golden, will not deter retailer coupon fraud because a retailer can just gather several of these coupons, submit them to the provider and get the reimbursement without having to link such coupons to actual sale transactions. Consequently, a provider will experience a loss by reimbursing the retailer without getting the benefit of generating the revenue from an actual sale of the product, as well as a loss of an opportunity for generating a potential repeat customer or consumer by the retailer hoarding such coupons. Combining the unique certificate mark with the unique identification mark, as proposed by Golden, does not provide a solution to the problem because a retailer can ask several living individuals and fictitious individuals to print these electronic coupons and submit these to the providers without requiring these individuals to actually buy the product.
A consumer coupon fraud is usually committed by unauthorized copying of the product coupon, counterfeiting, unauthorized tampering of the value and expiration date of the coupon, unauthorized creation of a special promotion and by printing or getting several coupons which a consumer or a single household uses by going back and forth to a store or several stores to purchase the same specified product that is, doing multiple redemption of the coupon. The latter type of consumer fraud is usually of a lesser monetary loss to a provider. However, these type of fraud is rampant and often ignored by a retailer. The providers experience loss by defeating the purpose of the coupon, that of promoting the product through the issuance of a discount coupon, as an incentive for the consumer to try the product at the discounted rate. Because these coupons are provided in limited quantity and usually for a limited time, the use of several of these coupons by one consumer prevents the provider from reaching a greater number of consumers belonging to different households. Golden et al. deters only the copying of the product coupon through the printing of a unique identification mark for each certificate or coupon. However, like the retailer coupon fraud, the unique marks do not deter the printing of several legitimate coupons by as many members of a household, not ignoring the potential for the same household using fictitious users to print more coupons. One household can potentially print a sizeable percentage of the total allowable coupons thereby minimizing the widespread distribution of these coupons.
The present invention addresses both the retailer and consumer fraud by providing traceability prior to the issuance and/or printing of the coupon, prior to a retailer acceptance of the coupon and more importantly, traceability of the product coupon at the point of sale. The system places

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