Enterprises, merchants unprepared as fraudsters target rewards programs

Loyalty programs have grown steadily in the last decade, with memberships increasing nearly 10% year on year. Consumers have accumulated USD 48 trillion of unspent loyalty points globally. Nearly half (45%) of loyalty program accounts are inactive, with consumers not tracking or redeeming points. Still, loyalty program fraud rose 89% year on year, predominantly driven by the amount of personally identifiable information (PII) available from increasing numbers of data breaches.

Merchants are unprepared to protect their loyalty programs. According to research conducted by Forter 42% state that they do not have the skills required to prevent fraud and abuse and nearly 50% report insufficient resources, and that loyalty program account fraud prevention is considered a low organisational priority.

Enterprises are struggling to limit damage as fraud attacks shift from the point of transaction to different elements of the buyer’s journey, including new account signup, login, and promotion and coupon use, according to the official press release. Cyber criminals take advantage of loyalty programs in several ways. The most significant attacks include account takeover, new account fraud, and policy abuse.