The Failed POS Lookup error is displayed when the receipt isn't sent to Punchh by the POS. The POS can fail to send the receipt to Punchh if there's any network/connectivity issue, or if there's another program on the POS trying to run at the same time that interrupts the API call from POS to Punchh.
If connectivity issues have been ruled out as a cause, restarting the Punchh Proxy Service on the Back of House computer can assist in resolving this issue.