5 ways to protect your company from discount fraud

If you have a discount program, you may have a problem that needs to be addressed

This is the third installment in a series on warranty and discount fraud. Read parts one and two.

If your company’s products are in high demand, it can be highly profitable for others to obtain your products at steep discounts by making fraudulent misrepresentations, only to turn around and resell the products into the marketplace. Sophisticated fraud schemes like this, aimed at finding the weaknesses in your company’s discount sales programs, are hitting organizations in industries from software, to pharmaceuticals, to consumer products. The bottom line is this: If you have a discount program, you may have a problem that needs to be addressed.

2. Employ end user verification

Protecting your company from fraud often simply means “not taking people’s word for it.” When business reasons justify authorizing additional discounts on your products, you need processes in place to verify the legitimacy of the information the end user is providing. The thoroughness of your investigation is the key first step to thwarting potential abuses. Your sales teams need to vet the proposed deal according to a protocol that intensifies the level of review based on the level of risk. 

Contributing Author

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Richard Nelson

Richard J. Nelson is a partner at Sideman & Bancroft LLP in San Francisco, where he specializes in litigation and government investigations. Mr. Nelson often...

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Contributing Author

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Erica Brand Portnoy

Erica Brand Portnoy is an associate at Sideman & Bancroft in San Francisco where she works with the firm’s Brand Integrity and Innovation Group. Her...

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