Beware of loyalty fraud

TRAVEL agents and their
clients are more vulnerable to
loyalty fraud than ever before
with the emergence of fraud
patterns that occur during the
redemption phase of loyalty
programmes.
President of the recently
launched Loyalty Fraud
Prevention Association (LFPA),
Iain Webster, says although
fraudulent exploitation of
loyalty points and airline miles
has existed for a number
of years on the ‘earn’ side
of equation, agents are at
greater risk of data breaches
and account take-overs when
‘burning’ points and miles.
Iain who is a former senior
executive of British Airways'
Executive Club and the Qatar
Airways Privilege Club, says
the LFPA was launched
in response to a recent
spike in criminal activity by
fraudsters who exploit weak
links in loyalty and reward
programmes.
Hackers access unsuspecting
travellers’ reward schemes and
manage to divert frequent flyer
miles to their own accounts.
Iain says vulnerabilities in
reward programmes are
likely to increase as loyalty
programmes, currencies
and transactions shift from
membership cards and
websites to smartphones and
the mobile environment.
Although most travel agents
in South Africa have not
experienced loyalty fraud yet,
Michael Smith, spokesperson
for the LFPA, says SAA’s recent
move from earning miles
based on distance to being a
‘cash’ type scheme – where
travellers can turn miles into
goods rather than flights –
makes the airline’s loyalty
programme more attractive to
fraudsters. “Whilst fraudsters
do sometimes steal the miles
and fly themselves, they are
more likely to take the cash
and buy whatever’s available
in the programme’s rewards
mall.”
One of the major challenges,
Iain says, is that members
often don’t treat their points
and miles as they would cash
nor their loyalty accounts as
bank accounts. As a result,
compromises or hacks often
go unnoticed until it is too late.
Travellers whose air miles
have been hacked or stolen
have very little ‘official’
recourse, with the traveller
dependent on the terms
and conditions of the loyalty
programme, says Michael,
adding that the traveller’s role
in a potential hack – such as
sharing a password – would
also play a role in resolving the
issue.
SAA did not comment at the
time of going to print.