With 3.3 billion memberships in the U.S. alone, loyalty programs are worth $48 billion, according to Colloquy. Hackers and thieves see valuable loyalty currencies — the cache of points and miles socked away in countless programs — as easy targets since customers often monitor them less, compared to other financial assets.
Challenge: Reduce loyalty fraud for a ‘Top-five Financial Institution’ client
A top-five U.S. bank faced increasing costs from loyalty rewards fraud. In one small credit card portfolio, the client identified $85,000 in fraud over a two year period. Almost two percent of their redemptions were fraudulent. And this didn’t include the ancillary expenses associated with monitoring fraud. Those costs for investigation, reimbursing customer points and apology compensation also hurt the client’s bottom line.
Solution: Deploy Connexions’ loyalty fraud detection tool, Rewards ShieldSM
To help reduce the impact of loyalty fraud, Rewards Shield was deployed to identify and stop fraudulent activity on rewards accounts. Rewards Shield leveraged sophisticated rules, which screened for fraud. This enabled our team of experienced loyalty fraud investigators to identify attempted attacks and prevent the loss of points and fraudulent redemptions.
Results: Loyalty fraud costs down 97 percent
Rewards Shield dramatically reduced loyalty fraud. Before Rewards Shield was deployed, the number of fraud attacks approached 300. The very act of protecting the accounts reduced the number of attacks to around nine as fraudsters moved on to easier targets. Those attacks that were attempted were also identified and stopped. After deploying Rewards Shield, fraudulent redemptions decreased 97 percent year over year, dropping to just $3,700 in a nine-month period. The up-front deterrence and attack identification and nullification is extremely effective. The client’s revenue stream is protected and customers’ confidence grows, knowing their loyalty currencies and identities are safe. This loyalty program is no longer a soft, easy target for fraudsters.