Hedera Hashgraph’s speed put to use fighting coupon fraud

There are some situations where even a few seconds is too long.

In 2015 a Silk Road merchant was arrested for selling millions of dollars of counterfeit yet functional coupon codes, for $25 of Bitcoin each.

Imagine spending a thousand dollars of Bitcoin just for 30% off your next manicure.

Coupon fraud is still a thing today, collectively costing businesses somewhere from hundreds of millions to billions of dollars a year. It's tough to get a read on its total costs because it comes in many different forms, because the victim varies depending on the type of fraud and because it simply isn't spotted at the time.

A large part of it though, is that the same coupon can often be issued multiple times in different places, allowing unscrupulous users to cash the same coupon multiple times.

The problem is largely about how to maintain transparency and quickly track data, some of which is quite sensitive, in a complex multi-stakeholder ecosystem.

That's basically just another way of saying "blockchain".

"Blockchain"

The intended solution isn't a blockchain per se, but the Hashgraph high-throughput ledger.

The plan is basically to have an online repository for all available coupons, like a sort of bureau for coupons, giving participants clear, real-time insight into where coupons are emerging, where they're going and where they're getting redeemed.

One of the project's stated aims is to fight fraud, but the real value for money here probably comes from letting brands more safely and easily roll out coupon campaigns with a wider range of partners, get more accurate data, play nicely with existing rewards programs and streamline the reconciliation process.

It's being spearheaded by an organisation called The Coupon Bureau (TCB), which is tied in various ways to manufacturers, retailers, standards organisations, tech companies and payment systems. It says it's working with accelerators that provide access to point-of-sale systems at leading retailers that represent almost 70% of the US retail market.

The name "The Coupon Bureau" refers to both the organisation behind these efforts, as well as the technology that tracks all these coupons.

TCB has been in the works since 2016, the technology was demoed in 2017 and on 22 April 2020 it announced that it would be using the Hedera Consensus Service for it.

“After evaluating a number of distributed ledger options, only Hedera Hashgraph, and the Hedera Consensus Services (HCS) were able to provide the real-time, tamper-proof logging capabilities that we needed to bring transparency, trust, agnosticism and industry oversight to a platform that connects all coupon industry stakeholders," said TCB CEO Brandi Johnson.

"HCS is really the only offering in the market today that is capable of providing the transaction throughput and latency, security, and functional requirements needed."

"TCB’s platform will enable real time validated, retailer agnostic manufacturer coupons to support smarter and more strategic campaigns, mitigate fraud, and simplify the redemption and reconciliation processes," Johnson said.

Real-time

When it first approached the task in 2016, the group that would become TCB noted that any solution would have to work in real-time.

If you want to prevent people from double dipping coupons, you can't spend 10 minutes putting transactions on the blockchain.

Similarly, if you want to verify and track coupons at the point of sale in physical stores, you need something fast. There, even something that adds a couple of seconds to the average shopper's checkout time is straining the bounds of acceptability.

You need something fast enough to qualify as "real-time" in the literal, rather than the buzzword, sense of the term.

“Through this partnership, Hedera has learned that fraud and lack of real-time, standardized data around coupon usage are two huge challenges facing the retail industry that TCB aims to address," Hedera Hashgraph CEO Mance Harmon said.

"Approximately 250 billion coupons are issued in the US annually, many through different providers, allowing consumers to redeem multiple versions of the same offer and costing brands millions of dollars. By adding the Hedera Consensus Service to the TCB platform, we together will create a trusted, immutable log for coupon transactions for all authorized stakeholders."

"Today, in addition to combating multi-million dollar fraud, brands issuing coupons have limited line of sight into where their coupons are being redeemed and when,” continued Harmon. "Bringing visibility and transparency to the coupon supply and usage chain is a perfect use case for Hedera and HCS."

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Disclosure: The author holds BNB, BTC at the time of writing.

Picture: Shutterstock