E-commerce fraud prevention specialists, Forter has unveiled the launch of its Loyalty Program Protection solution to protect high value rewards programs from fraud and abuse, enabling merchants to offer enhanced programs with the best possible customer experience.
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. With direct and indirect losses from loyalty and reward points fraud estimated at $1 billion every year, 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.
Doug Ferreira, Director, Financial Operations, delivery.com commented: “Our loyalty program allows us to thank our customers by rewarding them with better benefits and a better experience while also enabling us to stay ahead of the competition. Features like ‘Tell-a-friend,’ rewarding customers for referrals, are extremely popular, but are also a target for fraudsters and bad actors. Forter has helped us reduce loyalty program fraud by more than 60 percent while we build stronger relationships with our customers.”
Loyalty programs have grown steadily in the last decade, with memberships increasing nearly 10% year on year. Consumers have accumulated $48 trillion of unspent loyalty points globally. Nearly half (45%) of loyalty program accounts are inactive, with consumers not tracking or redeeming points.
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.
● Nearly 50% report insufficient resources, and that loyalty program account fraud prevention is considered a low organisational priority.
Michael Reitblat, CEO and Co-Founder of Forter detailed: “The combination of consumers not paying attention to their accounts and merchant lack of preparation is a big reason fraudsters find loyalty and rewards programs so alluring. It is clear that loyalty program accounts are low hanging fruit for fraudsters.
“Loyalty program points are a currency as valuable and untraceable as cash, and fraudulent activity in these accounts causes damage to brand reputation and monetary losses to merchants and consumers alike.”
Cyber criminals take advantage of loyalty programs in several ways. The most significant attacks include:
● Account takeover: Fraudsters hack into member accounts, exploiting accumulated points and payment instruments saved in the account.
● New account fraud: Fraudsters create fake accounts, often using stolen identities, and use them to accumulate, store, sell, and redeem stolen points.
● Policy abuse: Consumers overshare coupons or promotional codes, violating merchant policies and illegitimately gaining program rewards.
Forter’s Loyalty Program Protection solution is the only integrated fraud prevention platform that protects loyalty programs from all types of fraud and abuse, including transactional fraud, account-based fraud, and policy abuse.
“Merchants need to fight fraud together. Forter’s Loyalty Program protection solution gives merchants the only fully integrated fraud protection platform that protects 100% of the customer journey, not only at the point of transaction,” said Reitblat.
“Powered by a coalition of the biggest enterprises and designed by the world’s foremost experts, only Forter can provide the intelligence needed to stop fraudsters in real time and enable the best consumer experience.”