Glossary

Loyalty Program Fraud

Loyalty program fraud refers to the manipulation or exploitation of a company's customer loyalty program by individuals seeking unauthorized benefits or profits. This type of fraud can occur through various methods, including the creation of multiple accounts to exploit sign-up bonuses or referral rewards, making purchases to accumulate points and then returning the items without a corresponding deduction in points, and employees abusing their access to manually adjust points in favor of themselves or others.

The consequences of loyalty program fraud extend beyond financial losses to include potential damage to the brand’s reputation and diminished trust among loyal customers. Effective prevention strategies involve implementing robust account verification processes, ensuring seamless integration of transaction and returns systems with loyalty tracking, stringent monitoring of employee access, and the use of advanced fraud detection software. By maintaining a secure and fair loyalty program, businesses can protect their assets and uphold the integrity of customer rewards initiatives.

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