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Red Amber provides exception reporting and case management to efficiently detect cashier fraud within points based retail loyalty programs. The software also detects other types of insider abuses of loyalty card systems.

Red Amber dashboard on desktop

A Complete Suite of Solutions - 6 Modules

Red Amber is a complete suite of six modules, all targeted at various problems that retailers face with in-house rewards programs. In addition to detecting unusual patterns of points earning, available modules also detect suspicious patterns of points adjustment or points transfer, nonconforming gift redemption activity, non-qualifying member status upgrades, and unexpected changes in individual points balances.

  1. Red Amber Module 1 Icon, Unusual Points Earning

    Module 1 - Unusual Points Earning

    This module identifies and reports unusual transaction activity or points earning within a loyalty program or discount scheme. The module applies a risk score to each reported case, indicating the severity of risk that the pattern observed is not that of a real customer. The patent-pending approach for doing this goes beyond mere counts of transactions, incorporating other risk factors which further decrease the probability that the pattern observed is a real customer, or which, on the other hand, mitigate that risk.

  2. Red Amber Module 2 Icon, Points Adjustment Alerts

    Module 2 - Points Adjustments Alerts

    Points adjustment is an accommodation that is allowed by many programs for situations where a loyalty card was defective, or the terminal was offline or other reasons, defined within the rules of that program. Although such adjustments are justified and fair, it is easy to see how a points adjustment process may be vulnerable to fraud, even if multiple approvals are required for such adjustment.

  3. Red Amber Module 3 Icon, Points Transfer Alerts

    Module 3 - Points Transfer Alerts

    Points transfer between cards is allowed by some programs under certain conditions, such as death of cardholder, or for consolidation of points by different family members, to claim a larger reward. As with points adjustment, this is another activity that creates opportunities for abuse.

  4. Red Amber Module 4 Icon, Gift Redemption Alerts

    Module 4 - Gift Redemption Alerts

    Depending on your program rules, redemption might be allowed only for certain cards and not for others, or only for certain items and not for others. If non-qualified cards are given a redemption privilege, or if non-designated SKUs are distributed as gift rewards, then those activities will be flagged.

  5. Red Amber Module 5 Icon, Points Exception Alerts

    Module 5 - Points Exception

    After cards have expired past a user-defined grace-period, many program rules state that all points would be reset to zero for such accounts. However for various reasons, this might not happen as expected in every case, leading to issues with liability accounting, and other problems. Therefore, this module will report and list any expired cards that have a non-zero points balance, showing the points value of each such card.

  6. Red Amber Module 6 Icon, Status Upgrade Exception Reports

    Module 6 - Upgrade Exception

    Elite cards should only be given to customers who have achieved and maintain the required spending levels – not as a favor or accommodation. However, this is an area where operational discipline can sometimes be weak. Therefore, this module produces an exception report that flags issuance of elite cards whose originating card is not included among the accounts that are qualified for upgrade to elite status.

Prevent Insider Fraud in Your Retail Loyalty Program

10 Best Practices to Stop Employee Rewards Abuse

Red Amber ebook Cover Image
Free Report Message with Arrow

Get Instant Access to the Report

If you are a retailer with a points-based rewards program, then you have a problem.

Your cashiers and other employees are diverting points to create rewards for themselves.

That’s for sure. No rewards program escapes.

Of course, your program can generate a lot of insight and value for you and for your best customers, but why not make the program even

Bandit Face Flat Design
The Classic Abuse Scenario

In the classic abuse scenario, cashiers retain a rewards card that belongs to them or to a family member or friend. After they verify that the customer is not a rewards program member, they swipe their own card, earning points, based on the purchases of others.

Visiting home for the holidays, I was asked if I had a rewards card. I said No. Next thing I knew, the cashier swiped a card that was at the register. I got a special member price that reduced my charges by 7.6% and the card at the counter earned 11 fuel points, bringing total points to 404.
Cash Register Receipt, showing rewards member savings and fuel points earned
A cashier at a Giant Eagle Grocery Store in Elyria, Ohio was found printing out $55 worth of "in-store Giant Eagle" coupons. When questioned about this by Loss Prevention, she revealed that she had actually been doing this for two years and had already embezzled between $30,000 and $35,000 from the company.
Elyria Police at Giant Eagle store @TMCNEWS
Image by Permission: @TMCNEWS

Client Case

One of our clients is a $4 billion industry-leading retailer, with 50 malls and more than 200 supermarkets, hypermarts, grocery stores, and department stores. They generate more than 500 million transactions per year. Despite excellent operational discipline and good internal IT support, they uncovered significant cases of fraud and abuse on the very first day of implementation.

they uncovered significant cases of fraud and abuse on the very first day of implementation.

Fraud Loss Estimator

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How It Works

Suspicious activity is detected, and accounts are flagged as High Risk, Very High Risk or Severe Risk.

Red Amber Exception Report Pop-Up Window on Tablet, with Pointing Finger

Authorized users can drill down into transaction details, to review transaction amount, time of transaction, POS terminal number, cashier ID, tender type and other details.

There are permission-based data views, such as store level, district level, regional manager level, line-of-business view, Loss Prevention view, and Admin view.

And it’s not just reporting. Red AmberTM uses a case management approach that helps you to ensure that actions are taken, findings are documented, and cases are closed.

Customer Paying in Grocery Store

Insider Abuse of Rewards Programs Adds Up to Big Money

Here’s a summary of six key ways that rewards, points or promotional currency are often diverted by company insiders.

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Finger pointing, found one fraudulent rewards card out of many that are OK
If fraudulent card use is not detected, your data models could suffer a lot

Better Data – A Strategic Benefit

Accumulated losses from loyalty fraud can reach many hundreds of thousands of dollars, but this might not even be the most harmful part of the problem. Perhaps an even bigger concern is the effect of this activity on your data models.

If demographics of cashiers, or their family and friends become part of a model for “high-value customers” and if shopping carts of completely random nonmembers are used to describe the purchase habits of this “high value” group, then your data models could suffer a lot.

What this means is that Red AmberTM can be an impact player for your targeted marketing, by helping to improve the accuracy and precision of your data models.

exception reports based just on high transaction counts produce many false alerts.

Why Red Amber is Different

Existing fraud-detection solutions are directed at spending. Points earning is a completely different problem, and one that requires very different methods to detect and manage.

Some retailers deal with cashier rewards card abuse in a reactive manner. In other cases, in-house IT teams run exception reports that flag cards with high transactions. This is not effective, because there’s a long tail of high velocity card users in most programs, so exception reports based just on transactions produce many false alerts.

Red Amber uses stacked algorithms that are very effective at identifying improbable patterns of points earning activity, based on many risk factors. This greatly reduces false-positive alerts.

Product Benefits

  1. Crown Icon

    Unique in the Marketplace

    A fraud prevention suite designed for points earning – which is a very different type of problem from spending.

  2. User Icon

    User Configurable

    The user interface allows customized rules by line of business or other factors.

  3. Padlock Icon

    Loss Prevention

    8% of sales credited to your loyalty cards may be for transactions where the card is not from the actual customer. That’s a waste of money.

  4. Correlation Icon

    Better data

    If cashiers become part of a data model for “high-value customers” and if shopping carts of completely random non-members are used to describe the purchases of this “high-value” group, then your data models will be compromised.

  5. Targeting Icon

    Highly Accurate

    The patent-pending approach goes beyond transaction counts, and is highly effective at reducing both Type I and Type II Error.

  6. Full cycle Icon

    Cases, not Reports

    Red Amber creates cases that must be closed. There are also second-level alerts to Loss Prevention, for cases that are aging without being closed within the time allotted to do that.

  7. Checkmark Icon

    Complete

    A suite of six related modules, covering the complete loyalty life-cycle.

  8. Key Benefit, Compatible with all the top database platforms

    Compatible

    Can integrate with a wide variety of POS, databases and operating systems

Automate the Process for Detecting Employee Abuse of your Rewards Program

Quality Control Production Line with a Fraud Alert

Reviewing Alerts

How to detect cashiers who divert rewards points

Closing a Case

How retailers can control cashier rewards fraud
Photo, Jim Griffin, Lassu Inc.

Jim Griffin
Managing Director, Lassu

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