A new study finds that while most consumers view their loyalty rewards as equivalent to money, few look closely into whether their programs protect them from fraud. According to a new report from Richmond, VA-based Connexions Loyalty and conducted by Ipsos Public Affairs, 93 percent of consumers said they prefer their rewards programs include fraud protection, but just one in 10 strongly agree that they worry about it.
The research, which drew on the responses of 1,600 shoppers who each were a member of at least one loyalty program, found that 81 percent of Americans view rewards points as cash, but seem to treat points with far less interest than someone would with cash. One-third (34 percent) of respondents say they only log onto their accounts once every few months. Just 17 percent of respondents said they would stop doing business with an organization if a data breach of their loyalty program occurred, though 26 percent said they would cancel their rewards membership if fraud occurred.
According to the report's writers, "This national indifference to potential loyalty program fraud, and the assumption that the programs themselves protect consumers from this threat," is a concern both consumers and loyalty programs should tackle. The report points to the finding that 72 percent of loyalty program managers have had some kind of issue related to fraud in their programs, while one-third of respondents say that they believe it is a fast-growing concern.
"Brands and consumers must work together to make loyalty programs less desirable targets for hackers and fraudsters," the report's authors conclude, urging loyalty companies to encourage users to come up with stronger passwords and to put triggers in place to detect fraud quickly. "Waiting to fight fraud until accounts have been compromised will cost money, damage a brand's reputation, and diminish engagement, ultimately leading to lost customers and revenue."