Loyalty Blogs

Loyalty programs were intended to be rewards for customers, but over time, they’ve evolved into something much more significant—a huge reservoir of financial and personal information that hackers can’t wait to access. Why? Most loyalty accounts aren’t as secure as bank accounts, but they contain valuable assets—reward points, cached credit card information, and personal information that can be sold or used. 

And companies don’t always know just how exposed such programs are. As companies make rewards more desirable, cybercrooks target vulnerable security measures. It’s an issue that is only increasing. 

A recent study discovered that 72% of consumers are members of one or more loyalty programs, and more than $48 billion in rewards never get redeemed annually. That’s a whole lot of potential value just waiting to be used up. 

And so do hackers. Credential stuffing, phishing attacks, and account takeovers are now run-of-the-mill threats. If brands don’t get more secure, they stand to lose not only money but customer trust—something that’s much more difficult to regain once it’s lost. 

Loyalty Programs Contain Lots of Data—But Aren’t Secured Well 

The loyalty programs gather all sorts of data—email addresses, phone numbers, buying histories, and sometimes even payment info. But they don’t always have rigorous security protocols in place like financial accounts do. 

And what happens when hackers gain entry? That information is either sold on the dark web or used for fraud. IBM’s Cost of a Data Breach Report 2023 estimates the average breach cost at $4.45 million. For loyalty programs, a breach can also be an enormous PR debacle. 

Passwords Are an Easy Entry Point 

Humans reuse passwords on multiple websites—it’s a fact. Hackers are aware of this, which is why credential stuffing attacks are so effective. They use passwords stolen from previous breaches and attempt them on different accounts. 

A Security Boulevard report revealed that half of businesses admit their loyalty programs don’t have the same level of security as their financial systems. That’s like leaving the front door unlocked while investing in a top-notch security system for the safety inside. 

Reward Points Are Just Like Money 

The thing about loyalty points? They have real-world value. Hackers know they can: 

• Redeem points for flights, hotel stays, or gift cards 

• Peddle stolen points for sale online 

• Leverage compromised accounts to steal from other members 

According to a Forter study, 42% of loyalty fraud instances are cases of unauthorized redemptions. That’s when customers login one day and discover that their earned rewards disappear. 

Phishing Scams Are Shockingly Successful 

Loyalty program emails—point notifications, special offers, or account news—are the ideal lure for hackers operating phishing scams. 

Cybercrooks impersonate brands and send fraudulent login pages, which deceive customers into surrendering their credentials. In 2023, phishing attacks jumped 47%, and loyalty scams contributed significantly to that growth. 

What Businesses Can Do to Fight Back 

The silver lining? Brands aren’t helpless against these attacks. The cybersecurity environment is changing, and businesses like Novus Loyalty are upping their game. Becoming PCI DSS v4.0.1 certified is a significant part of that process. 

How PCI DSS v4.0.1 Secures Loyalty Programs 

The Payment Card Industry Data Security Standard (PCI DSS) v4.0.1 is the newest security standard, created to protect sensitive information from breaches. Here’s what it offers: 

• More Secure Authentication: Multi-factor authentication (MFA) becomes essential, making it more difficult for hackers to gain entry. 

• End-to-End Encryption: Customer information is encrypted in storage and during transactions, so even if someone gets their hands on it, they can’t access it. 

• Real-Time Threat Detection: Companies are able to identify and prevent attacks before they happen. 

• Role-Based Access Controls: Not everyone has access to everything—only authorized staff can access critical information. 

For businesses operating loyalty programs, PCI DSS v4.0.1 is not a regulatory checkbox—it’s critical protection against real-world threats. 

Beyond Compliance: Other Ways to Harden Loyalty Security 

Getting PCI DSS certified is an excellent start, but that is not sufficient. Cybercriminals are constantly evolving, and brands have to remain one step ahead. Here’s how: 

1. Utilize AI to Identify Fraud in Real-Time 

AI-fueled fraud detection examines user activity and marks anything suspicious—such as a login from a foreign location or a request to cash out tens of thousands of points all at once. Some systems can prevent fraud from occurring in the first place, cutting risks by 60%. 

2. Make MFA Mandatory 

Most customers won’t turn on multi-factor authentication (MFA) unless asked. Brands must make it the default setting—not an opt-in one. 

3. Regular Security Audits 

The security of a loyalty program is no stronger than its weakest link. Routine audits assist companies in locating and repairing flaws before they become available to be exploited by hackers. 

4. Educate Customers on Cybersecurity 

Most of the fraud occurs because customers unintentionally fall for fraud. Basic things—reminding them not to ever click on dubious links or reuse passwords on accounts—can make all the difference. 

Final Thoughts: Security is Non-Negotiable 

Loyalty schemes are too important to be an afterthought where security is concerned. The “it won’t happen to us” days are far behind us. 

Novus Loyalty’s PCI DSS v4.0.1 certification is an important step towards enhanced security, but brands have to take a proactive approach if they want to get ahead of cybercriminals. Robust authentication, artificial intelligence-powered fraud detection, and regular security learning aren’t niceties—they’re necessities. 

Because where customer loyalty is concerned, trust matters the most. And in today’s digital age, trust begins with security.