Are You Prepared to Fight Loyalty Program Fraud?
Loyalty programs are offered to benefit enterprises’ most valued and trusted customers. And they work. 22% of customers shop exclusively with brands of whose loyalty programs they’re members. However, Forter reported an 89% increase in fraud attacks in this area. As this form of fraud and abuse continue to rise – how prepared are you for this problem, and what should your organization be doing to prevent it?
TAKE THE QUIZ
In which industry does your business operate?
Travel
Apparel & Accessories
Food & Beverage
Other
Airlines are particularly targeted for loyalty fraud, and with 4.37 billion passengers per year traveling by air, there is an immense quantity of data for cyber criminals to potentially exploit.
Next Question
Apparel and accessories brands often suffer from policy abuse related to their loyalty programs, with legitimate customers oversharing referral or coupon/discount codes to cash in on referral rewards.
Fraud attacks against food & beverage businesses increased by 41% this year, with the main culprit for this rise connected to abuse related to policies.
Industry: Travel
Industry: Apparel & Accessories
Industry: Food & Beverage
Your Order is on it's way!
How does your organization define loyalty fraud?
When a bad actor uses a victim’s loyalty-related (points/credits/rewards/miles) for their own profit.
Once a criminal has access to an account through account takeover (ATO).
Occurs when a single bad actor serially opens duplicate accounts with the same company to cash in on coupons and/or referral discounts.
All of the above.
This is a good starting definition! However, it does not encapsulate other pains associated with loyalty fraud including account takeover (ATO), sign up abuse or new account fraud, as well as policy abuse.
Good Start! But that's just one attack vector fraudsters use to commit loyalty fraud. Other vulnerabilities exist including sign up abuse or new account fraud and policy abuse. Only 27% of merchants surveyed in a Forter commissioned study know how to properly define Loyalty Fraud ATO.
Nice Try! But this is actually known as sign-up abuse or new account fraud, and is a more sophisticated method that fraudsters use for a variety of schemes in addition to account takeover (ATO) and policy abuse. 48% of merchants surveyed in a recent Forter commissioned study know how to properly define Loyalty Sign-Up Abuse.
Great job! Only 15% of merchants polled in a recent Forter commissioned survey were able to define both Loyalty Fraud connected to ATO and Sign-Up or New Account Fraud connected to Loyalty Program Fraud, but 40% did not have a clear definition of either.
Occurs when a single bad actor serially opens duplicate accounts with the same company/program to cash in on coupons and/or referral discounts.
More than half of merchants surveyed in a recent Forter study reported that trying to prevent fraud or abuse in their organization is “extremely challenging.”
How do you manage fraud prevention within your organization?
Multiple External Vendors or Tools
In-House
A combination of both in-house and external tools
Over 40% percent of organizations conduct fraud capabilities internally. However, in-house fraud prevention limits the breadth and depth of data used to make fraud decisions and also requires growing risk teams in order to review fraud cases.
40-50%
Multiple External Vendors & Tools
Using external vendors for fraud prevention means you're on the right path! However, managing multiple vendors / tools can often negatively impact the accuracy and timeliness of your fraud prevention efforts. 59% of merchants surveyed reported that detecting and blocking immediate threats in real-time is the most challenging issue.
A Combination of In-House & External Tools
Using external vendors to help manage fraud means you're on the right path! However, using a combination of in-house tools and external vendors can lead to inaccurate systems with a negative impact on customer experience. Forter research indicates that 50% of respondents are less likely to purchase online if the checkout takes longer than 30 seconds.
Is the fraud pevention system you use manual or automated?
Automated using AI/Machine Learning Technology
Rules Based or Manual Reviews
Oh no! This approach comes with high operational costs to continually maintain and train staff, and is not scalable during peak seasons or as your business grows.
Automated Using AI/Machine Learning Technology
You're on the right track! Automated systems are more efficient, but only as good as the curation of the ML models and data inputs to the system.
Has your business recently suffered from an influx of calls to your support center regarding hacked or breached accounts?
Yes
No
You may have an Account Takeover (ATO) problem. Nearly 70% of merchants believe Loyalty ATO highly impacts brand reputation. Fraudsters can liquidate customer loyalty points causing pain for your business and most valued customers.
69%
Even if customers are not calling in reporting hacked accounts, data breaches are pervasive. Customers often use identical passwords and details across sites, so even a breach elsewhere puts your platform and customers at risk.
Is your business showing multiple one-time use emails or fake accounts?
Roughly 60% of merchants recently surveyed rated Loyalty Sign-Up Abuse as highly impactful on allocation of resources to fraud/review teams.
Get Results
Uh-oh, seems like fraudsters are targeting your site! Fraudsters are likely creating fake accounts and committing promotion abuse, account “aging,” or attempting to earn rewards, etc.
Nice going, seems like your system is aware of this vulnerability and is working to prevent fraudsters from exploiting it.
You May Not Be Fully Aware of the Dangers of Loyalty Fraud!
There’s more to learn about loyalty fraud and abuse to better understand the specific vulnerabilities this rising fraud vector creates for your business. In a recent Forter survey, merchants responded that low organizational priority and a lack of resources (45%) are the primary reason why they cannot prevent or deter fraud, followed closely by a lack of internal skills to address it (42%) and the business not perceiving loyalty fraud as a major threat (37%).
Stay ahead of the curve. Find out more about how to better protect your business and your most valued customers, and speak with an expert now!
Talk to an Expert
Request a Demo!
You're Off To A Good Start!
Seems like you have the foundational knowledge of the kinds of vulnerabilities unprotected Loyalty Programs can create for your business. Looking to get more informed so you can be one step ahead of fraudsters as they continue to grow more sophisticated? Stay ahead of the curve. Find out more about how to better protect your business and your most valued customers, and speak with an expert now!