It seems like everyone has had "that" friend at some point in their lives. The one who stretches the limits of a “friends and family” discount at their place of work.
We might think this is harmless enough—after all, will a company really notice such a minor exception to the rule?
But no matter how you look at it, this is a form of fraud.With mobile device trade-in programs offering such a valuable stream of revenue for your business, you can’t afford to let fraud plague your processes. Once you can identify mobile device trade-in fraud, you can start safeguarding your trade-in program to mitigate potentially costly issues.
What Is Mobile Device Trade-in Fraud?
Fraud can exist in multiple forms within your mobile device trade-in program. However, all forms start with your ability to assess individual mobile devices as consumers bring them in.
The better the quality of a used mobile device, the more money you can make with it in the open market. This is why it’s so critical to properly assess the value of devices at the point of sale—so the price you pay on the trade in doesn’t have to be readjusted on the backend (at the processing facility), impacting your revenue in the process.
Whether you’re a carrier or a retailer, trade-in programs typically rely on sales representatives to independently determine a device’s value. You may give them specific guidelines to follow, but in the end you’re hoping these employees follow the honor system when assessing devices.
The existence of human error (accidental or purposeful) opens the door for all kinds of fraud:
- Purposeful Value Tampering: Let’s say a customer comes in to trade in a Samsung Galaxy S7 Edge for a new iPhone 7.
A Galaxy S7 Edge in excellent condition might be worth around $250, but the consumer offers a device with a cracked screen. A sales rep committing fraud in your trade-in program might enter “excellent condition” and give the customer $250 when the device was only worth $100.
- Lack of Attention to Trade-in Detail: Looking at the bigger picture of your trade-in program, any instance of human error could be perceived as fraud. Simple mistakes in the device assessment process could result in higher trade-in prices even though, for example, the battery doesn’t work. You won’t recoup your money in the open market if the device doesn’t function properly.
- Buying Back a Stolen Device: Consumers could bring stolen devices to your sales reps in the hopes of getting quick cash to spend in-store. If your sales rep inadvertently enters a fraudulent International Mobile Equipment Identity (IMEI) number into your point-of-sale system, you end up paying out for the trade-in. However, you’ll lose money in the long run dealing with the matter of stolen devices.
These are just a few ways that fraud can plague your mobile trade-in program. But no matter what, it all comes back to human error in the point-of-sale process.
If you want to minimize mobile trade-in fraud, you have to take human error out of the equation.
Automation Can Prevent Mobile Device Trade-in Fraud
When customers come in to trade in a mobile device, sales reps shouldn’t be wasting valuable face-to-face time assessing the phone—they should be doing their best to upsell high-margin items like accessories. If you can automate the assessment process, your sales reps can increase upsell opportunities while you reduce fraud at the same time.
An example of how mobile device trade-in automation solves fraud is in the stolen device scenario. Rather than hoping consumers don’t provide fraudulent IMEI numbers, you can take advantage of Luhn algorithms to verify the correct code is entered. Beyond that, you can quickly check the IMEI numbers against the GSMA database to identify fraudulent trade-ins before you offer payment.
Another powerful automation tool that can be used in the retail environment to help prevent fraud is HYLA’s Diagnostic and Trade-in value app. This app can be downloaded directly onto the trade-in device and performs a lightning fast full diagnostic assessment of the device as well as determining the device value.
Mobile trade-in automation solutions help you increase assessment accuracy and ensure minimal pricing adjustments in the backend of your program—especially those that result from fraud at the point of sale.
Fraudsters will always find new ways to work around a system. But if you have the proper tools and processes in place, you can eliminate the vast majority of fraud and boost your bottom line.
If you want to learn more about designing a high-quality mobile trade-in program, download our free white paper, 15 Steps to Creating an Efficient Mobile Trade-in Program.
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