By Don Bush
Most companies prioritize the security of payment and transaction information over that of loyalty and rewards programs. But don't be fooled – anything of monetary value is fair game to criminals.
Loyalty and rewards programs are a huge draw for consumers, encouraging them to spend money to get future benefits and discounts. Many save up points to use for a big trip or purchase, making those points an extremely valuable asset. And, often, these loyalty accounts are extremely vulnerable to fraudsters looking to turn points into cash.
There is an estimated $225 to $350 billion in loyalty programs, which are commonly used by merchants in many industries. Thirty-four percent of consumers only log into their accounts every few months; only 23 percent check account balances even once a month, providing a huge window of opportunity for fraudsters to operate for weeks undetected.
How exactly do criminals access these accounts? Loyalty fraud tends to work along the same lines as card-not-present (CNP) fraud, with criminals gaining access through a mixture of phishing scams, identity theft and hacking weak email/password combinations. Once criminals have these points, they spend them, combine them with other accounts, sell them or use them to receive an item that can be resold for cash.
After all, that's what fraudsters do, turn stolen goods and services into cash as often and as quickly as they can.
Financial professionals regularly remind the public that they should check their bank and credit card accounts daily. It is only through such regular checks that accountholders can spot fraudulent activity and act on it before it is too late.
Here are the three main factors businesses should consider in keeping rewards programs safe:
Following are best practices for protecting loyalty accounts:
Loyalty programs can be a powerful way for companies to interact with and reward their best customers. Looking at the security and protection of each customer's account should be given the same consideration as monetary transactions when it comes to reducing fraud. Otherwise, criminal networks can hit at the heart of a company's top revenue generators: loyal customers.
Don Bush is vice president of marketing at Kount. Previously, he was director of marketing at CradlePoint, a leading manufacturer of wireless routing solutions in the mobile broadband industry. Don has worked in several management roles within the technology segment for over 20 years with both hardware/software manufacturers and as a partner in two top technology marketing agencies. He also co-authored the seminar series Common Launch Disasters and How to Avoid Them. Contact Don at firstname.lastname@example.org or visit The Green Sheet Inc. is now a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals. Click here for more information.
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