Two hundred and thirty-eight billion dollars. That’s the estimate of total outstanding value of all the rewards and loyalty programs in the U.S. It’s a gigantic figure, so much so that it has caught the attention of folks who wouldn’t mind cashing in on all those points – other people’s points that is.
Loyalty program fraud is on the rise. Frequent flyer miles – estimated in 2012 at around 24 trillion – are susceptible to cyber-thieves who use pilfered miles to purchase tickets, book flight upgrades and even sell the points to others. Over the years, three in four airline loyalty programs have fallen victim to fraud. And retail rewards programs are no less prone to online attacks. Stolen points are regularly exchanged for gift cards, products and services or turned into cash.
All this fraudulent activity has companies with loyalty programs redoubling their efforts to ensure that their loyalty programs are secure. It’s a strategy that is as much about protecting customers’ assets as about protecting their brand reputation. Reports on data breaches and loyalty point theft can contribute mightily to a loss of consumer confidence.
With protection against loyalty fraud becoming a top priority, Connexions Loyalty has developed a new whitepaper, Fighting Loyalty Fraud: Seven Ways to Protect Your Customers and Your Bottom Line. In recent years we’ve seen an increase in attempts to steal or manipulate loyalty rewards programs, especially as highly secure EMV programs are implemented across the retail industry, security that make it more difficult for hackers to steal personal and financial data. If criminals can’t hack into a credit card or bank account, they move on — and loyalty programs are a target. This research paper supports our launch of Rewards Shield, our new product that combats loyalty fraud by preventing, disrupting and avoiding potential fraud vulnerabilities and pitfalls.
Four key methods of protecting consumers are listed here. For additional tools and methods, plus more insightful data regarding loyalty fraud, download our free whitepaper and learn more about how to protect your enterprise’s loyalty programs and the customers who count on them.
- Monitor account activity, including registration, login and transactions.
Businesses should monitor device information throughout the customer lifecycle, from the opening of an account, through the account login and all subsequent transactional activity. Any activity that occurs in the account — an email change, a phone number change, a different IP address — should be monitored to determine if something is out of the ordinary.
- Educate customers about loyalty fraud.
Encourage your members to check their account statements and urge them to log in more frequently than the average of once or twice a year, perhaps giving people an incentive to do so with a special promotion. Educate customers about breaches and the importance of changing their password on a regular basis. People should treat their loyalty accounts as they would any bank or credit card account.
- Go further with identity verification.
A multi-factor authentication process should be used, one that requires, for example, identification of a code image in addition to inputting a password and a temporary key. It’s worth noting that companies have to strike a sensitive balance between protecting customers and making them feel like it’s too difficult to access their account or that they are being “watched.” Let customers know that the multi-factor authentication is for their own protection, just as they experience with their bank or credit card accounts.
- Don’t tip off the fraudsters.
When introducing device technology for fraud protection, it’s essential to stay covert and under the radar. If you’re alerting a good customer that you’re collecting certain information, chances are you are tipping off criminals as well. Make sure you are collecting only the information you need to identify risky transactions, rather than collecting all the data you can and potentially turning customers off — as well as letting criminals know exactly what you’re doing.
For the full list of ways to protect against loyalty fraud, plus additional leading insight from the experts at Connexions Loyalty, get our free whitepaper.