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As loyalty programs achieve new levels of ubiquity, loyalty points and tiers look more and more like a traditional currency every day. With that revelation comes a slew of advantages: Customers have an incredible range of options when deciding how to redeem their points, and have access to tangible added value just by interacting with brands with which they already engage.
Unfortunately, with that increasing value comes the risk of crime. Recent data from the RFi Group estimates that $238 billion in loyalty program rewards go unredeemed, underlining the immense value found in the industry. Combined with the continuing proliferation of cyber crime, loyalty fraud is becoming a hot topic for loyalty providers and consumers alike.
This risk has led to the development of cyber security programs, such as the recently released CyberSource Loyalty Fraud. Andre Machicao, Senior VP at CyberSource, notes the irony of loyalty programs that are compromised via cyber crime.
“This type of fraudulent activity not only impacts the profitability of businesses, but also hurts customer trust and loyalty — the very things these programs were designed to build,” said Machicao. “To protect themselves and their customers, businesses are seeking ways to monitor fraud throughout the entire loyalty program lifecycle. This is exactly what our new Loyalty Fraud Management Solution is designed to do.”
The process of loyalty fraud is simple enough: The thief will create a fake account into which they’re able to funnel points from multiple compromised accounts to spend as they please. Because of the increasingly measureable value of these points, loyalty fraud is now an issue that has been brought into the spotlight by firms looking to prevent this fraud and bring peace of mind to both the company and its loyal customers.
The answer to this dilemma, Idomoo CMO Yotam Benami told Loyalty360, is something that most companies are already striving for.
“The reason for the massive amount of unclaimed rewards is low customer engagement with loyalty programs,” said Benami. “On average, Americans only actively engage with 42% of their loyalty programs, meaning that there is a huge opportunity to improve engagement and reduce waste and with it fraud. We at Idomoo have found that shifting communications from personalized emails or letters to personalized videos dramatically improves customer engagement across the board, which isn't entirely surprising given that customers are increasingly seeking experiences, rather than just rewards from their loyalty programs and personalized videos provide a unique and engaging alternative to traditional communications.”
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