New system to block fraudsters in online promotions

WM Circle Logo

By: Wise Marketer Staff |

Posted on April 6, 2005

New system to block fraudsters in online promotions

The interactive promotion agency ePrize has launched a system that helps reduce the costs of fraudulent entries in online promotions, sweepstakes, games, points-based rewards, loyalty programmes, sales incentive programmes and other contests.

The platform, called Promotion S.A.F.E., was built to spot malicious and fraudulent attempts to enter online promotions and programmes, both prior to registration and at the time of registration.

How scammers scam According to CyberSource, in 2004, fraudulent online practices of all types cost merchants some US$2.6 billion. Promotions are typically hit by online scammers who register multiple participants from a single source, use automated 'bots' (web based computer programmes) to create a flood of ineligible entries, or to submit false information (such as a bogus name or address).

The software is a screening system that filters out individuals who attempt to enter a promotion or sweepstake unfairly, blocking any rule-breakers it identifies, to ensure that promotions and competitions are fair for the legitimate consumers who participate. The elimination of false entrants helps keep things running smoothly, too; scammers' practices can clog or even disable online promotions and the web servers they run on, costing promoters a small fortune, not to mention bad publicity.

Losing more than money "The losses to business from fraudulent promotion entries are as outrageous as the practices themselves," said ePrize founder and CEO Josh Linkner. "Across the internet, as much as 5% of promotion prizes are awarded to ineligible or otherwise fraudulent entries, and tremendous resources often are spent on identifying, communicating with, and replacing disqualified participants."

As a result, ePrize spent more than a year developing Promotion S.A.F.E. to ensure each participant in an online interactive promotion has the same opportunity to win in a fair and entertaining competition.

Verification technique Currently only available for use with US-based promotions, the system employs five steps before and during the registration process to detect and block fraudulent participants:

  • Address verification This process verifies the entrant's mailing address using the US Postal Service database.  
  • Image security This tool asks the entrant to manually enter a word or number from a randomly generated image on the screen before they can advance further within the promotion - a technique that blocks non-human 'bots' from submitting entries.  
  • IP address blocking A web page informs the player that his or her IP address has been associated with previous fraudulent activities and shuts them out of any ePrize-monitored promotion. (An IP address is a unique number that identifies every internet-using computer; this technique could however carry a risk of blocking legitimate users as many internet service providers (ISPs) randomly share their pool of IP addresses among their users, meaning that a legitimate user could be temporarily assigned an IP address that was blocked because of another person who uses the same ISP.)  
  • De-duplication People who try to enter multiple individuals under the same address can be filtered out if some of the information they provide matches that of another registered profile.  
  • Blacklisting This global master list compiled by ePrize records the details of previous fraudulent or malicious offenders and prevents them from entering future promotions for any ePrize-monitored promotion.

"This system will save businesses time, money, and reputation," concluded Linkner. "In the end, they will collect much cleaner data from each internet promotion, and participants will enjoy a fair competition." In 2004, ePrize signed over 70 new brand accounts, and sales rose from US$9 million (in 2003) to US$18.5 million.

More Info: