Loyalty fraud is a costly issue for programs. A lot of it originates in China, which is why IHG Rewards Club doesn’t permit gifted awards in China made within a week of check-in and some personal information about the guest is required in advance. Chinese IHG members have been known to script and automate booking of 5000 point PointBreaks awards and resell them.
Delta now requires close-in bookings departing Africa, Russia, and China to be ticketed in person. There’s much ticket fraud out of Africa.
The challenge though is limiting the cost of fraud without undercutting the value proposition of the program to legitimate members. That’s what I highlighted earlier in the week with Alaska’s new policy of prohibiting booking awards within 72 hours of travel on Cathay Pacific, JAL, or Hainan Airlines. This was especially problematic for members wanting to book Cathay Pacific first class.
Alaska heard the concern of members and narrowed its restriction. The fraud with redemptions on these airlines is primarily for intra-Asia awards, so the 72 hour restriction has been limited to intra-Asia bookings only.
Update – The advance booking restriction for these carriers, including awards from North America to Asia are being removed. The 72-hour advance booking requirement will remain in place for intra-Asia awards only.
— Alaska Airlines (@AlaskaAir) February 15, 2018
Kudos to Alaska for listening to members and narrowly tailoring the restriction. I still think there are better ways to combat fraud than placing such limits on members at all. Limits could be placed only when miles are purchased for an account or points transferred into an account immediately prior to booking within 3 days of travel while also improving ID validation for those booking the awards. Limits could apply only to gifted awards under those same circumstances (and better yet, scrutinize the bookings in the name of other travelers at the last minute on routes with heavy fraud rather than banning them outright).
The goal is to identify fraudulent transactions without limiting legitimate transactions. However the new policy is far better than the one they had just imposed. And the speed with which they rolled it back is surely commendable.
(HT: One Mile at a Time)