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U.S. consumers currently hold about 3.8 billion memberships in customer loyalty programs, and they rely on companies to keep their award points and personal data secure.

Len Vraniak

According to HelloWorld's 2017 Loyalty Barometer Report, 64 percent of consumers like earning points for purchases, and 70 percent like their loyalty programs partnering with others to increase ways to earn points.

With U.S. consumers currently holding about 3.8 billion memberships in customer loyalty programs, that adds up to a lot of points-and a lot of financial value–floating around out there.

It shouldn't be surprising that criminals recognize the opportunity and are increasingly targeting accrued points, because they see the money to be made. A report by Javelin Strategy and Research [subscription required] indicates that theft of award points is a growing segment of financial crime. The report notes that about 11 percent of non-credit/debit card financial attacks in 2017 involved loyalty programs, nearly double the level of the year before.

In its May 2018 issue, Kiplinger's Personal Finance offered a number of tips for consumers to protect their loyalty accounts, but the increasing attacks on loyalty points brings up questions of security on the company side of the loyalty relationship. Those questions only intensify as companies expand partnerships with other businesses to create more opportunities for their customers to accrue and redeem loyalty points.

Tim Mason, CEO of digital marketing technology company Eagle Eye, points out that in Canada, "major retailers continue to announce they are consolidating their loyalty programs or expanding them to include multiple banners - all with the goal of offering a better customer loyalty experience."

As that trend continues in Canada and elsewhere, it is important to remember that the data security of a multi-company loyalty program is only as strong as the security of its weakest member company.

Governments around the world are focusing more attention on the privacy of personal data–the European Union's General Data Protection Regulation (GDPR) being the most prominent result so far.

We at The Wise Marketer have already discussed the implications of the EU's more stringent data privacy rules, and loyalty marketers in multinational companies are coming into compliance with those rules. The jury is out on whether other nations will follow suit by tightening regulations around security of personal data-though the United States, Japan and others are looking closely at the matter. Regardless of the final result, savvy companies will work to ensure that their loyalty programs offer robust security for their customers' data.

That work will earn companies lots of loyalty points from their customers-the people whose data is at the center of earning loyalty.

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