What is loyalty fraud prevention?

Loyalty fraud prevention prevents attacks on company loyalty programs. These malicious attacks affect consumers by stealing or misusing loyalty program rewards or points, or by stealing airline miles, often through account takeovers, the creation of fake accounts, or through loyalty point resale.

With account takeovers, malicious actors gain access to a user’s loyalty program account, and then abuse a member’s rewards. With fake accounts, fraudsters may create multiple accounts to accumulate points fraudulently or use fake identities to exploit promotional offers.

Loyalty fraud prevention software is an important investment, because loyalty fraud can have devastating impacts on businesses. Particularly vulnerable are businesses in the hospitality and e-commerce realm, where customers are often destined to return so long as their experience is positive.

When businesses invest in loyalty fraud prevention, they increase their customer’s sense of digital trust. This is an integral step in maintaining a favorable brand reputation and creating a sustainable business model. Proactively investing in software allows businesses to save money they would otherwise spend on frantic PR spend during a digital disaster.

Verification challenges

• Multifactor Authentication (MFA). Requires additional verification, such as SMS or app-based codes, for secure account access.
• CAPTCHA challenges. Deters bots and automated attacks by prompting human verification for key actions (logins, redemptions, etc.).

Bot mitigation

• Rate limiting. Limits the frequency of requests from any single IP address to prevent automated credential stuffing or brute-force attacks.
• Proof-of-work challenges.  Forces systems to solve computational challenges, which slow down bot-driven attacks without affecting human users significantly.
• Behavioral analysis. Detects bot-like activity by analyzing user actions and flagging patterns (e.g., rapid clicks, identical actions) that differ from typical human behavior.

Compromised credential monitoring

• Credential screening. Blocks the use of known compromised credentials by checking them against a database of stolen credentials.
• Real-time alerts for compromised data. Uses threat intelligence feeds to detect and block compromised accounts, safeguarding legitimate user access.

Account activity monitoring

• Unusual behavior alerts. Tracks account activities and flags suspicious actions, such as sudden high-value redemptions or logins from unfamiliar devices or locations.
• Automated account locking. Temporarily locks accounts that display suspicious patterns, allowing review and verification before further access is granted.
• Historical pattern analysis. Compares current account activity against historical behavior to detect potential fraud, such as an unusually large number of redemptions in a short period.

HUMAN continuously monitors user behavior to detect abnormal account creations, assigning a score to every interaction that makes it possible to put an end to fake account creation and account takeovers before they happen.

HUMAN Security provides advanced protection against loyalty fraud with solutions that identify and block account takeover attempts, detect compromised credentials and fake accounts, and monitor accounts post-login to prevent unauthorized activity.

What is loyalty fraud?

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