5 tactics to help prevent loyalty reward redemption fraud

Fraud is increasingly becoming top of mind for loyalty marketers as 72% of loyalty programs have experienced fraud-related issues.

For example, online criminals are aware that stored points and travel miles are valued at $48 billion in the Unites States and as such rewards are now a target of theft via online hacking. In fact, on average, these criminals perform this fraudulent type of activity for an average of 5 years before getting caught.

As efforts are focused on helping to protect members’ valuable rewards, it’s important all members of the organization are aligned when implementing a fraud solution.

Consider these five tactics to help prevent loyalty reward redemption fraud:

• Educate: Build awareness and train employees so everyone is familiar with — and can identify — common examples of fraud such as the creation of fake accounts, compromised account takeovers, as well as your processes for combatting it. Management should clearly communicate fraud detection and fraud policies with employees. Not only does it help to raise the level of awareness and importance of mitigating loyalty reward redemption fraud but it also helps to set expectations with employees on the repercussions if they are found guilty of fraud.
• Track: Logging both customer and employee loyalty program activity is essential. This allows you to detect fraudulent behavior before it spins out of control. But using reports to monitor program behavior is only going to catch it after it happens. Consider applying algorithm-based analytic tracking methods and real-time technology to keep a close eye on behavior and be proactive about the potential for fraudulent activity before it happens.
• Monitor: Within your loyalty platform, make sure you have the ability to track both recent behavior and changes to the member profile, historical point transactions or redemption history. Respond to each and every change within a member’s account to determine ‘atypical’ behavior and always send confirmation communications when key profile elements are updated (including email address, password and physical address).
• Restrict: Ensure key safety features like multi-layer authentication and complex password modules, are integrated into your loyalty program. Implementing the ability to intercept redemption events in real time is a best practice too, should your system or employees detect or suspect fraud.
• Communicate: If you see something suspicious within your program, quickly respond and alert program management, IT, security and HR, if appropriate. Sending loyalty members regular and automated communications is essential in helping to protect your program against fraud.

Preventing loyalty reward redemption fraud is a priority for Epsilon, and recently, we received the highest score possible in the fraud criterion in The Forrester Wave™: Loyalty Technology Platforms, Q2 2019. Click here to review the report. Our configurable fraud-risk detection capability constantly monitors your members’ interactions to identify and interdict potential fraudulent redemption activity in real time so you can take action to stop it before it happens.

Download our e-book, Agility Loyalty Reward Redemption Fraud Detection to learn more.