Evan Schuman's StorefrontBacktalk

On Friday (June 4), Microsoft’s Bing search engine announced it was killing one of its more popular programs, the CashBack effort. Microsoft was rather vague about the reason it’s backing off (“After a couple of years of trying, we did not see the broad adoption that we had hoped for,” blogged Bing Senior VP Yusuf Mehdi), but there has been a compelling suggestion that the program was simply being gamed by clever consumers.

The idea of bribing consumers to take desired actions is not always effective. Noted blogger Ben Metcalfe makes a compelling argument—which all E-Commerce execs should listen to—that the very same people who will be motivated by money will also invest time and effort into manipulating your system.

Metcalfe’s case is that the Bing program was simply too easy to rip off. “For example, every time I’ve found something to buy on eBay, I’ve noted the auction details, cleared my cookie, searched for eBay on Bing and clicked through. Performing that slightly but not terribly inconvenient task has netted me up to a 30 percent refund on my eBay purchases. Ditto for B&H, Dell and others,” he wrote. “These purchases were going to be made anyway—thus no lead was generated. None of these people has switched over to Bing search engine, known as the halo effect. None of these people has switched to Bing Shopping for non-CashBack purchases, and Microsoft and the retailers have been paying handsomely for our hacks.”

Some might look at this issue and conclude that Microsoft’s error was in integrating insufficient security safeguards. (You’ll find that arguments using the premise “Redmond was acting overly trusting and user-friendly” rarely hold up.) No, the problem is that Microsoft got too complicated for its own good. If the company wanted to fund (or get retailers to fund) having lower prices on Bing than elsewhere, that’s perfect, as well as being perfectly simple.

But it was Microsoft’s effort to come up with something more sophisticated that was the program’s undoing.

Last week, we discussed some mobile efforts at Best Buy and Macy’s, and a similar issue cropped up. Should a retailer funnel discounts through a customer’s mobile device—which opens the chain to mobile-level fraud–or route those transactions through the store’s existing POS network? The mobile option is more cool and compelling, but the internal POS route is safer because it simply gives customers far fewer fraud opportunities.

Bing’s CashBack program failed not because of security holes per se. It failed because it got complicated and offered lots of fraud opportunities. And no bargain-hunting consumer can resist a good challenge coupled with an opportunity.