Protect Your Loyalty Program: How to Prevent Fraud

Certain people are always going to try to cheat the system. Whether it's figuring out how to get out of a parking ticket, sneaking a bag onto the plane that should have been checked, or claiming a prize they haven’t earned, folks will go to great lengths to get something for free. In the past, loyalty programs too have fallen victim, but digital loyalty platforms prevent fraud and protect small businesses. Something paper can't compete with.

Fraud committed by customers

A common example of a paper-based loyalty program fraud is counterfeiting. For 25 years, Subway offered its Sub Club program – after purchasing a 6-inch sandwich, customers were rewarded with a stamp. Once 8 stamps were collected, the customer had earned a free 6-inch sandwich. By June of 2005, Subway had noticed that it was giving out more free sandwiches than were being purchased. This was because customers were creating and distributing counterfeit Sub Club stamps. With the help of laser printers and photo editing software, customers could make their own stamps and fill their Sub Club booklets without making any purchases. This escalated to a much larger scale when fake stamps were mass produced and available for sale on the auction site, eBay. Subway realized that the only way to halt its franchises from losing money was to discontinue the program.

Fraud committed by employees

The Sub Club program was also subjected to internal fraud. Subway employees were stealing rolls of stamps and distributing them at large. If customers can cheat the system, what’s holding back employees from doing the same thing? Subway wasn’t alone, as Cold Stone Creamery ran into a similar situation – its punch card program awarded customers with a free scoop of ice cream when their card was filled, something that employees could easily finagle for their friends. Cold Stone also pulled its paper-based loyalty program.

So as a storeowner, how do you implement a loyalty program with minimal risk for fraud? For starters, digital loyalty programs offer increased security. As far as counterfeiting goes, QR codes are unique, and won’t be duplicated on homemade loyalty cards. The same goes for smartphone apps, which are securely protected in a Member’s device. Plus, Belly adds an extra layer of security in that rewards cannot be redeemed with only an email address. You can rest assured that the rewards your customers are getting have been hard earned by them and that they deserve them.

Digital loyalty programs also offer tracking, something that paper punch cards obviously cannot do. If there’s any doubt in your mind about a customer’s activity, you can easily review their visit and redemption history at your business directly on your in-store iPad.

To guarantee that your loyalty program is totally secure, a solution like Belly ensures that points are tied to the customer who earned them. Belly Points cannot be shared with other customers or at other businesses within the Belly Network. Your rewards are unique and should be reserved for the loyal customers who have earned them!

Protect your customers and business; prevent fraud by going digital.