Fraudsters are targeting loyalty programs at a rapidly increasing rate, with The Loyalty Security Association (LSA) estimating that an incredible $3.1 billion in redeemed points are fraudulent. In other words: that potential revenue loss can add up quickly. It’s a question of when, not if, the fraudsters will attack. Fraud and security need to be a prominent consideration in all aspects of a program’s journey, most importantly, from the time that the program is first being conceptualized. Data leaks and fraud breaches have the power to immediately destroy a brand’s long-fought equity and image—something that brands have spent countless hours and dollars developing. There is a fine line to walk during program design, but effectively achieving the right balance between customer satisfaction and security is possible. Let’s dive in.

From Concept to Security: Safeguarding Your Program

What we often see in the early stages of program design is a dedicated focus on a smooth customer experience at all costs. While that’s crucial, the knee-jerk reaction to firm up any vulnerabilities after a program has already launched is far too common. The cost is a genuinely seamless experience for customers. The goal is to find that sweet spot early on and continue to refine over time.

At the very initial stages of loyalty design, both your customer experience team and fraud/security teams should be working together in all aspects of the experience. There is no silver bullet which can deliver the right combination of seamless experience and airtight security but, with the right team members at the table, there can be alignment on the proper balance of these seemingly opposite priorities.

During the design phase, several questions must be asked:

• What redemption options are available, and what’s the immediacy of these rewards?
• What aspects of the program have the highest level of potential exposure?
• What customer data is being captured?
• What security-enhancing behaviours are customers already comfortable with?
• How can we segment our customer base to apply stricter metrics for risky customers versus provide a more seamless experience for trusted customers?
• What is the pain threshold for fraud (and how much are we willing to accept)?
  
  

Fortifying Your Program

Once these questions are answered, there are a variety of tools at the disposal of loyalty program designers, and the answers above will guide teams on the most effective tools to ensure that a program is protected against fraudsters. These tools can generally be grouped under the following categories:

            Prevention

• Security & Trust Member Validation, such as registration and login controls, device ID
• Enhanced Identity Validation to prevent Account Takeover, such as Enhanced Trusted Member Score
• Earn & Redemption Controls, such as thresholds, MFA, PINs at POS

            Detection & Monitoring

• Velocity Rules which establish triggers for alerts/investigation/MFA
• Advanced Anomaly Detection which will leverage algorithms to identify outliers and prevent redemptions
• Third-party Fraud Detection Tools

            Alerts & Reporting

• Notification Messaging such as login or redemption notifications
• Exception Reports based on unusual behaviour
• Audit Tracking

            Cyber Security

• Vulnerability Testing
• Regular network security reviews and upgrades
• Security Monitoring
• Identity and Access Management Tools

Maintaining a secure program which provides customers with a seamless experience cannot be a ‘set it and forget it’ approach. Fraudsters continue to become more sophisticated in their attacks and, in turn, programs must remain a step ahead by constantly re-evaluating and tweaking their security procedures. In doing so, brands will be able to maintain an optimum customer experience, while also ensuring that its members feel secure to engage wholeheartedly.

For even more tactics to safeguard your loyalty program, join our Webinar with the Loyalty Security Alliance on October 24th @10 a.m. ET.  Register here: https://lnkd.in/gSWfcU5m

Interested in learning more about how Bond can help you design and implement airtight loyalty programs that withstand fraudsters and maximize customer experience? Reach out to info@bondbl.com for all the details.