Blog / Policy Abuse

Top 5 reasons to make stopping policy abuse a business priority

Promo and refund abuse are expensive issues, but is your c-suite overlooking them? These 5 arguments explore how they affect the goals and growth of the wider business.

Top 5 reasons to make stopping policy abuse a business priority

Fraud teams often find it hard to get business leaders to invest in stopping promo and refund abuse, even though it can be as expensive as online payment fraud. Why? Policy abuse is difficult to measure and explain, so it’s often not considered a priority.

If you can get C-levels to take policy abuse seriously, you could save yourself a headache and your business a mountain of revenue (which they’ll thank you for in the long run.)


Here are some of the common challenges you might hear from C-level and how to respond.

1. “Policy abuse is just another cost of doing business”

Promo and refund abuse aren’t new (and aren't exclusively online either), and business leaders have previously accepted the loss as just another cost of doing business. However, worryingly, almost a quarter of merchants attribute 11% of their refunds and returns to policy abuse.

Grab attention with stats on the policy abuse boom

You should show other teams why you need to act now by presenting industry stats on the growing risk. C-suites are becoming increasingly data-driven and won’t take action on a hunch, so it’s important to speak their language.

Here are some policy abuse stats you could share:

Also keep in mind that promo abuse has been shown to rise with promo popularity, and the global digital coupon market is set to surpass $29 billion by 2031.

Talk to other fraud professionals

You could talk to other fraud professionals currently dealing with the problem to get anecdotal yet strong evidence.

We’ve heard teams say, “Refund abuse is the most expensive type of fraud that we have”. This insight from another business (especially if they’re a competitor) might inspire leaders to take action.

Easy policy abuse solutions are available

There’s no excuse for accepting the costs when you don’t have to. Research possible tools to give your C-suite a clear solution.

Graph networks are a great tool to help you uncover abusers and improve explainability with visual data.

2. “A sale’s a sale! Who cares what happens after the transaction?”

Sales teams often don’t distinguish between "good" and "bad" sales – but they should. Abuse after the transaction can impact your brand, genuine customers, and future sales.

Here’s how you can explain the damage…

Refund abuse costs are huge

Refund abuse always happens after the transaction, and the costs can be huge. You’ll lose value if you can’t resell the product and return shipping is often very pricey (just look at Amazon and Walmart.)

Are your hard-won profits going to promo abuse resellers?

Promo abuse reselling schemes are an example of post-sale promo abuse. Policy abusers can bulk-buy your stock at a discount and resell for double the original price. Nike’s Jordan 1 Retro trainers are a prime target, with an average resale value of $269/£222, which tops their retail price by $120/£100!

If you find your exclusive product available elsewhere, try to calculate potential revenue lost (if Nike loses $120 per pair sold, the figure could be staggering). You should factor in that resellers often return excess stock, so refund abuse costs can also pile up.

Are your loyal customers missing out?

If promo abuse bots wipe your stock, many genuine customers will miss out, and you risk losing them for good. Since nine out of ten adults in the UK have come across suspected scams online, your customers are at high risk of falling for fraud attempts if they try to buy your product elsewhere.

Could organized crime groups be using your brand as bait?

Your product could become online bait for organized fraud groups or money launderers, and the reputation damage could be huge. If you mention the risk of high-level crime, C-levels tend to listen.

3. “We can’t risk losing good customers”

Business leaders might think that tackling promo and refund abuse means increasing friction and risking customer churn. But actually, the opposite is true…

Mishandling policy abuse can cause customers to churn

Up to 83% of customers say that they won’t do business with a brand they don’t trust. Mishandling policy abuse can damage trust. If a genuine customer can’t redeem a previously abused voucher, or you deny a well-meaning customer a refund, you could lose their business for good.

Customers care about sustainability

According to figures published in Forbes, shoppers across all generations are willing to spend more for sustainable products. Refund abuse is hugely damaging to the environment, so if your business doesn’t get a handle on it, you risk losing good customers.

Highlight to C-suite the environmental impact. If 17 billion items are returned every year globally, returns account for around 4.7 million metric tons of CO2 emissions annually – ten times the amount generated by 57,000 US homes over an entire year. And an entire truckload of clothing gets sent to a landfill or burned every second.

C-levels should take sustainability into consideration in every leadership decision, and managing refund abuse is no exception.

4. “Without an easy promo or refund, would the customer have placed the order?”

Generous promos and easy refunds are essential. Up to 90% of shoppers say that a convenient return policy is important to them when making a purchase and 60% are actively looking for promos. But, if a customer only places an order when there’s a discount, do you want to hold onto them?

You might be attracting the wrong type of customer

You might be wasting your marketing budget on attracting customers that will never pay full price. And since no customer wants to pay full price if others get the same for less, this can damage your pricing integrity and revenue over time.

Plus, the more promos abused, the higher the cost of acquisition. This can have a significant impact on your margins, and in some cases, profitability.

Keep customers but discourage bad behavior

Incentivize marketing teams: if you help to stop abuse, you will save your budget and can use the opportunity to build customer relationships. Crafting personalized customer service emails with messaging like, “If you are in need of extra coupons, how else can we help?” can be great for your brand, and help discourage bad behavior – it’s a win-win!

5. “Can you give me easy metrics to understand the problem?”

You might hit a wall if your C-suite asks for easy metrics and you don’t know where to start. You can’t use straightforward data like chargeback rate to measure policy abuse, but there are a few workarounds:

Use industry data as a jumping-off point

Industry-standard statistics can give you a rough figure of your policy abuse losses. As covered above, 11% of returns are fraudulent. So you can calculate 11% of your total returns from a previous year for an idea of the costs. The number is likely to be high, so it could shock your business leaders into action.

Improve explainability with graph networks

Graph networks are visual tools that are easy for any business team to understand. They can help you walk your C-suite through the problem (and the solution).

Using link analysis, you can spot your multi-accounting customers, sign-up bonus abusers and referral farmers quickly, and deal with them differently depending on the level of threat. You can block prolific fraudsters, and temporarily increase friction for policy abusers that are otherwise good customers.

Arm yourself with information

Overcome these five C-level challenges and you’ll build a convincing case for stopping policy abuse. To strengthen your argument with more info and statistics, read our promo and refund abuse insights page.

Related content