It is estimated that around $1 billion is lost annually to loyalty program fraud. Hackers can even steal sensitive personal data, as some loyalty programs are linked to credit cards.
“We rarely associate loyalty programs with a high risk of fraud. Because they rarely involve financial transactions, customers tend not to worry about security . And the same goes for the companies that offer them.”
“This creates a perfect space for hackers to grab the bonus points that customers have earned from their various transactions.”.
According to him, scammers usually target companies with weak loyalty program security. Electronic loyalty cards are really easy to steal as they are delivered instantly and don't require a physical shipping address, allowing scammers to steal your data using just your email.
Types of fidelity fraud
Loyalty fraud can be perpetrated by customers, employees, or external fraudsters. Typically, according to Daniel Markuson, this happens when there is a loophole in the loyalty program's system or Terms of Service
Conducted by customers
This happens when customers find a loophole in the system and exploit it to advantage . In one of the most famous cases, American civil engineer David Phillips bought 12,000 mugs to exchange for 1.2 million airline miles.
Conducted by employees
Company personnel may claim unused “benefits” intended for customers or may steal customer information by exploiting access to internal systems.
Conducted by external fraudsters
This includes fake accounts, data theft, and other methods of illegally obtaining loyalty program rewards. Fraudsters can hack your loyalty account, create fake accounts, and steal the identities of legitimate customers.
How to protect yourself
Daniel Markuson from NordVPN says there are a few preventative measures you can take to avoid such scams:
- Use strong passwords for your accounts. You can also check if your password has been compromised online or use a service to generate strong random passwords.
- Be careful of dangerous public WiFi. Public WiFi are easy targets for cybercriminals, so you could end up exposing not only your loyalty points but also your banking information. However, you can use a reliable VPN, like NordVPN, to hide data .
- Check your account regularly and monitor your account activity frequently. Loyalty fraud is successful because the customer notices changes very slowly.
- Do some research on the company offering the loyalty program. Find out what security measures they implement on their loyalty program databases, if this information is available.
- Avoid scammy websites designed to steal your data. Scammers and hackers can create websites to steal your login information, financial details, or even your bonuses.
