The Holidays Are Here!
Yep, we said it. You may think what?! It’s only September. We just had Labor Day. It’s still 100 degrees! But for retailers and businesses, the holiday season has kicked off. Without most realizing, the holidays have been slowly creeping in – whether it’s the presence of the Pumpkin Spice Latte (which has made its earliest return yet) or announcements of nearly doubling of holiday toy stock and expansion of toy shops. And those all happened the last week of August!
But they’re not just preparing for Christmas. From Halloween to Hanukkah, retailers are revving up their holiday programs and getting ready for the holiday shopping and travel season. And an influx of sales means an influx of fraud. So while merchants may be all set on the holiday stock and sales front, it’s time for them to take a closer look at loyalty programs. Along with the sales and digital transactions, we’re warning retailers and businesses not to underestimate the targeting of loyalty and rewards programs.
During the holidays, consumer spending jumps and so do the points in their loyalty memberships. With merchants adding even more incentives during the holiday season, consumers are also more inclined to spend money to reap those holiday-only benefits and discounts. These points aren’t just for show; consumers can earn tickets for international flights, tablets, or even cash back. Fraudsters have seen the value in loyalty accounts, and these programs – while more popular than ever – are more vulnerable than ever to fraudsters who are expanding their pilfering ways.
Holiday season aside, loyalty programs across industries are estimated to be worth around $225 – $350 billion. But, only 34 percent of consumers check their accounts every few months. And even fewer (23%), check these account balances even once a month, leaving ample time for fraudsters to take advantage. Here are the four main factors businesses should consider in keeping these rewards programs safe:
- Watch that data: Balance the amount of customer data collected from loyalty accounts– don’t collect too much and keep it safe. If hacked, loyalty programs can lead to stolen goods with fraudsters falsely redeeming rewards, but also customer identity theft. This endangers merchant-customer relationships and could impact sales in the long-term.
- Apply machine learning and screening technologies: With so many accounts and data points, make sure you’ve incorporated machine learning to help identify suspicious transactions without disturbing the user experience. Advanced technologies like Device Fingerprinting, Geo-Location, and Proxy Piercing can ensure consumers are who they say they are.
- Educate your members: Consumers don’t even realize that their loyalty points can be a treasure trove for fraudsters. Because loyalty accounts have assets and information, inform consumers that they should be treated with the same care as bank and credit card accounts. More vigilant customers can also be another line of defense.
- Monitor loyalty transactions: The signs of loyalty fraud are very similar to the indicators of CNP fraud – so watch them closely. Keep a close eye on changes such as revising or adding addresses; new login credentials; and irregular spending patterns. Make the most of your techniques to fight CNP fraud and use them to fight loyalty fraud.
Loyalty programs will only continue to grow and are an important component to a merchant’s long-term relationship with their customers. Maintain that trust by prioritizing the security and protection of each customer’s account. Consumers are expecting good tidings from merchants this season in exchange for their loyalty, don’t let criminal networks ruin the holiday fun.