American Airlines, United Airlines Hit by Growing Problem of Loyalty Fraud
Jan. 15, 2015
A report from earlier this week shined a spotlight on an emerging type of fraud that has been plaguing travel-related Websites and other e-commerce merchants that have loyalty and rewards programs. American Airlines and United Airlines this week acknowledged that thousands of its customers had their rewards accounts accessed illegally. In some of the cases, trips or upgrades were booked without the customers’ knowledge. Both companies insist their systems were not breached, but thousands of usernames and passwords illegally obtained in other breaches were used to access rewards accounts.
Loyalty fraud is a growing problem among airlines and, with the burgeoning amount of illegally obtained logon credentials available to criminals, growth will only accelerate. According to Kristian Gjerding, CEO of CellPoint Mobile, a London-based company that provides payment, booking and other services for the digital channels, as companies continue to enable miles or points to be used for other products and services, that growth will only continue.
“As you see relationships expand to make miles programs more like currency, then this problem will continue to expand,” said Gjerding. “Strong brands will have strong currency. It becomes a valuable commodity, more than just a matter of creating loyalty. And, as more relationships are being created among more companies, more and more value is created. When there are enough partners involved, they’ve created a unified currency. Then the problem accelerates. The amount of miles available to steal and their value to fraudsters is going to explode.”
Officials from American said up to 10,000 AAdvantage accounts have been illegally accessed, although not all have had their balances affected. A United spokesperson told the Associated Press it has seen around three dozen instances of illegal mileage transactions on MileagePlus accounts.