Infographic: Sales Channel Incentive Fraud Trends For 2014


Published on

Here are the top and emerging trends in channel and consumer promotion incentive fraud. The data are pulled from over 16M sales channel incentives and consumer rebate claims.

Published in: Sales, Business
  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Infographic: Sales Channel Incentive Fraud Trends For 2014

  2. 2. 360incentives has indexed and processed over sixteen million channel and consumer incentives claims since launching in 2009. 100% of these claims are audited for fraud and compliance. These slides will highlight fraud and compliance statistics and current trends up to the end of calendar Q2, 2014. Should you have any questions about the data, or be interested in learning more, please feel free to email
  3. 3. FRAUD IS COSTLY Companies lose billions of dollars every year as a result of misrepresented claims, not to mention the time and money expended trying to stay ahead of fraud schemes. Human audits alone simply cannot keep pace with fraud, especially for a large volume of claims. On average 1-9% of promotional spend in sales incentives and rebate programs are classed as fraudulent and/or non-compliant claims. 1 EXAMPLE Data based on one quarter for a global hard goods client: Fight the 105,000 claims were processed in a quarter 9,765 declined due to compliance issues 1,068 declined due to potential fraud $2.1M net savings for the client identified PRIOR to being processed myth of random auditing The fact is, there is too much information and too many claims to employ a successful random audit method. You need to take a systematic approach to fraud and employ proven models that are used in forensic accounting. $ Expecting to detect fraud with random audits is like trying to win the lottery.
  4. 4. TOP REASONS FOR CLAIM REJECTION BY INDUSTRY SPIFFS | APPLIANCE 28% did not meet program requirements 9% potential fraudulent claims 27% duplicate entries CONSUMER REBATES | APPLIANCE SPIFFS | HOME COMFORT CONSUMER REBATES | HOME COMFORT 32% did not meet program requirements 12% potential fraudulent claims 24% duplicate entries 15% did not meet program requirements 7% potential fraudulent claims 24% duplicate entries CONSUMER REBATES | TIRES 18% did not meet program requirements 4% potential fraudulent claims 21% duplicate entries 29% did not meet program requirements 6% potential fraudulent claims 14% duplicate entries 2
  5. 5. 3 EMERGING THREATS TO INCENTIVE PROGRAMS Account Takeover happens as a result of phishing, spyware or malware scams. The fraudster gains access to the sales associates’ online account and begins to appropriate payments for real and fictitious claims in the name of the associate. Sales associates may not realize they have been victimized until their money has already been taken. Altered Invoices One of the top current schemes is where the sales associate or consumers will modify the invoice to reflect another model with a higher payout amount, change the sale/delivery date to reflect eligibility into multiple programs or modify the sale price to reflect a higher cashback for the consumer. Combat this by digitizing each invoice and validating claims across modules/clients in order to identify such anomalies and decline the claim before it is paid. Fictitious Consumers Another emerging fraud trend is submitting claims with fictitious consumer information. The sales associate submits claims where no actual product was sold using the false information. Without a consumer authentication tool in place, there is no way to identify these claims as being potentially fraudulent.
  6. 6. 4 6 WAYS TO PREVENT INCENTIVE FRAUD 1 | START TRACKING SERIAL NUMBERS Most important step. Use the unique identifier of the serial number from your physical goods to associate with each dealer, each customer and subsequently, each rebate you process. 2 | REQUIRE A COPY OF THE INVOICE Ensure that copies of the store invoices are submitted with all claims. We will tell you why this is important in the next step. 3 | KEEP AN EYE ON STORE INVOICE NUMBERS By receiving the store invoices with claim submissions, you start to build a baseline of what the logical flow of invoice numbers looks like. You can start to ask questions like “does this claim fit into the logical flow or does it look like it’s from 2 years ago?” Out of place invoice numbers are a great indicator that the claim needs a closer look. 4 | TRACK THE ZIP/POSTAL CODE Cross reference the zip/postal code against that of the store where they made the purchase. Does the purchase vs where the purchaser lives correlate? There might be a valid reason for the geographical distance but at least you can flag it. 5 | THE NAME GAME Watch for different variations of the same name being utilized multiple times for the same product, using the same serial number. E.g. John Doe, Jonathan Doe and J. Doe. 6 | HUMAN EYES When segmenting the reporting of your claims processing by territory, it is highly valuable to run those reports by your field sales managers. They might be able to recognize some of the top performers over time. For those that are unfamiliar, it’s an opportunity to get to know who that top salesperson is or potentially stop the top fraudster. 101001
  7. 7. 5 DROP THE RANDOM AUDITS Let’s demonstrate the impact of random auditing by using the rate of claims for one of our own clients. THAT’S APPROXIMATELY OF COURSE, TO DETECT THIS YOU WOULD NEED TO AUDIT ALL 15,000 CLAIMS YOU ARE LOOKING AT OVER $56K IN FRAUDULENT CLAIMS PER WEEK MULTIPLY THIS BY THE AMOUNT OF THE CLAIMS (IN THIS CASE $100-$200 ) 375 FRAUDULENT CLAIMS PER WEEK 2.5% OF THOSE CLAIMS BEING FRAUDULENT OR NON-COMPLIANT 15K PER WEEK AND USING A FIGURE OF Questions to ponder: Do you know what % of your claims are audited? Do you have a fraud detection process in place? Visit and complete the short assessment to learn the true effectiveness of your sales incentive campaigns. Download our free Auditor’s Checklist! To learn more about 360incentives and Risk and Compliance visit
  8. 8. Thanks for viewing! We hope you found this presentation informative. If you would like to learn more about how to reduce sales channel incentive fraud in your business starting today, please download our free e-book Fraud: The Most Overlooked Opportunity. You'll learn the processes and techniques we use to identify and prevent tens of millions of dollars of fraud every year, plus it comes with a free worksheet to get you started. DDOOWNNLLOOAADD NNOOW CLICK NOW TO GET INSTANT ACCESS!