The Incentive Marketing Association's annual IMA Summit, held last week in Newport Beach, Calif., gave industry members the opportunity to network, learn and discuss some of the biggest issues affecting rewards and recognition today. With 357 attendees, the event tackled topics ranging from the effects that blockchain will have on loyalty programs to the state of fraud in the gift card industry.
The session on blockchain made the distributed ledger technology a little easier to understand. During the session, entitled, "Transforming Loyalty With Blockchain," moderator Rebekka Rea, global business development for Swych, Inc./Innovative Prepaid Solutions, led a panel of Deepak Jain, CEO of Swych, Inc., and Holly Glowaty and Kristen Thiry, co-founders of K&H Connection, through a detailed explanation of what blockchain is and how it can bring transparency, scale, automatic settlement and reconciliation to all sorts of transactions.
One of the main confusions about the technology is the perception that it is linked to the bitcoin cryptocurrency's attempts to create a new kind of currency. Jain worked to dispel this idea. "Blockchain is more about bringing transparency to the data management surrounding transactions than about creating a new currency," he said.
Thiry agreed, stating that, "while Blockchain makes it possible to create a universal currency for gift cards, especially closed-loop cards, the transaction transparency it offers is its big advantage."
Panelists pointed out that escheat laws, long a bane of gift card suppliers, can also be administered more efficiently through a blockchain platform. "Blockchain allows the gift card industry to dive deep into the data of their users, which will make it easier to target audiences with cards that will be redeemed, and for those that aren't redeemed, the issues surrounding escheat laws can be managed better through smart contracts set up within the platform," said Glowaty.
According to the panel at the session "Fraud - How Big is Our Problem?" Five years ago there was very little fraud happening in the loyalty rewards space. But as attacks from the dark web were made first on frequent flyer miles then virtual gift cards and plastic gift cards, the landscape has become much more dangerous. "We have a loyalty reward fraud department and I spend eight to 10 hours a week dealing with this issue," said Nancy Alderman, IP, associate director, TSYS Loyalty.
According to Paul Hubert, vice president, customer and merchant services for GC Incentives, a division of Giftcertificates.com, account takeovers have become a major concern in the loyalty gift card program arena. Hubert quoted research from Verizon that showed 90 percent of all data breaches come through email phishing scams. "The average email phishing scam gets a 4 percent click-through rate," he said. "That's twice the industry standard in the marketing world where two percent is the average for an email program."
Who is the group most likely to be scammed? KC Fox, senior vice president of technology services for Radial Inc. surprised the audience when he revealed it was Millennials. "It used to be the elderly, it's now the Millennials because they grew up with the idea of communicating anonymously in the digital landscape so they don't have the same level of caution as other demographics," he explained.
Jenny Jeansonne, CPIM, director of partnership and growth for Stockpile, left the audience with some realistic advice on how to deal with fraud: "You don't have to have the best fraud and security system, you just can't have the worst," she advised. "Find out what the best practices are in the industry and implement them. That will make it difficult enough to penetrate your database so that your company not the target."
Fox summed the session up by putting the topic of fraud prevention into a business perspective: "It's not just about stopping fraud, it's about increasing sales volume, too. The game is about having the data to evaluate a transaction accurately because you don't want to shut down a legitimate customer. Every declined transaction has the potential to be a lost sale and the loss of any future sales."