What is loyalty fraud

Loyalty fraud is when a fraudster gains unauthorized access to an account in a merchantâs loyalty rewards program. The criminal can either redeem the victimâs points themselves, or exchange the points for goods more easily sold, such as gift cards.

What is an example of loyalty fraud?

A cybercriminal commits identity theft. Along with emptying bank accounts and maxing out credit cards, the fraudster also stealsÂ the victimâs frequent flyer points, either using them to buy a plane ticket or selling them on the dark web.

Is loyalty fraud a crime?

In some instances, yes. A customer manipulating the system for their own gain may not technically be doing anything illegal. On the other hand, individuals making unauthorized transactions with accounts other than their own are definitely commiting a crime. In cases where the activity happens across state lines, the crook could be facing a felony charge and jail time.

What is loyalty abuse?

While itâs nearly the same as loyalty fraud, some people use the term loyalty abuse in reference to legitimate account holders who attempt to circumvent the terms of the loyalty program for their own benefit. For example, opening multiple accounts to take advantage of a deal designed for new users.

Are loyalty programs for real?

Yes. Many businesses offer loyalty programs, especially within the travel and lodging industries.

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Loyalty Fraud

Loyalty programs are all the rage, with a growing number of industries offering perks to repeat customers. But offering great rewards to incentivize consumers can also attract fraudsters. Our guest author looks at the how and why loyalty fraud has become such a huge threat, and what merchants can do to protect themselves.

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