This document discusses trends in sales channel incentives and fraud prevention. It provides statistics from 360incentives on over 16 million claims processed since 2009. On average, 1-9% of promotional spending is deemed fraudulent or non-compliant. Emerging fraud threats include account takeover, altered invoices, and fictitious consumers. The document recommends ways to prevent fraud such as tracking serial numbers, requiring invoices, and monitoring for anomalies. It argues against relying solely on random audits for fraud detection.

1. SALES CHANNEL
INCENTIVES TRENDS
FOR 2014

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 jking@360incentives.com

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. 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. 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. 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. 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 incentivegradertool.com
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 www.360incentives.com

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.
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