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Cyber Exposures from Digital Loyalty Programmes

Digital loyalty programmes have become an effective tool for organisations to use in this modern day environment. Having the easy one touch access on customer’s mobile phones makes it convenient and accessible to everyone that has a device. The loyalty programmes usually require customers to make an account and enter personal information, in order to receive rewards and access other benefits, such as discounts. Through providing transparency and convenience for the user, the phone application simultaneously records data which can be attributed to each individual account. Industries such as Airlines and Travel, Retail, Food and Hospitality, and Hotels and Accommodation, usually optimise the use of digital programmes, which means they are most at risk given their large customer bases.

With this kind of information on an application, it puts organisations at risk of major exposures and loss of customer information. Poorly designed mobile or web loyalty applications can be exploited by hackers, which allows customer information to be potentially breached. It is important that organisations are aware of the risks that they are embracing, when they encourage customers to download mobile applications.

In the event of a breach of customer personal information, companies could find themselves subject to class action lawsuits or onerous international privacy legislation from multiple jurisdictions. Breaches can also create dis-trust between an organisation and their customers, as well as having an impact organisation’s brand and reputation, which in turn can cause loss of customers and revenue.

In this article, we explore organisation’s cyber risk profiles and how cyber insurance can provide critical protection for direct loss and liability issues that may arise when customers use digital loyalty programmes.

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