It’s not something that’s widely talked about, but loyalty fraud is extremely prevalent. When you consider points are a currency with a defined value, and account security & protocols are generally much less stringent than a bank, loyalty programs can make for an easy target.
Air India is currently struggling with the aftermath of a serious fraud incident, where member accounts were hacked by a team including an ex-employee who allegedly had access to Air India’s intranet and points-engine. To combat the issue, they have implemented an overly onerous redemption process which amongst other things involves submitting proof of identity. Ugh! The brand damage will be counted in the tens of millions.
Other loyalty programs continue to battle the creation of ghost accounts. This occurs when a travel agent creates an account for travellers without telling them. The traveller earn points into the account, then the travel agent transfers the points to their personal account. Airlines in particular invest heavily in fraud monitoring to identify these types of instances.
There are many other instance of fraud occurring constantly, so much so that a new global organisation has been launched to combat the practice. The Loyalty Fraud Prevention Association has a mission statement of ‘ . . . supporting the industry in its fight to reduce and eliminate Loyalty Fraud’.
The leadership team is stacked with industry heavyweights, lead by Iain Webster, who spent over 25 years in senior management roles at ICLP, British Airways and Qatar Airways. He also worked as VP International for Points.com, and also IBS, the airline software services company.
The Loyalty Fraud Prevention Association officially launches on the 1st Jan 2017, however memberships are available now.
Loyalty & Reward Co believe such an organisation is long overdue, and predicts it will act as a catalyst for the loyalty industry globally to take fraud prevention much more seriously.
Philip Shelper is a specialist loyalty consultant based in Sydney, Australia who obsesses about everything to do with loyalty and rewards. His company Loyalty & Reward Co are a leading loyalty consulting firm.
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