With the surge of online ordering since the start of the decade, loyalty programs have proven to be a critical revenue engine for restaurant brands looking to attract new customers and generate repeat business. However, every rose has its thorn, and in the case of these channels, digital fraud and abuse are a growing, multi-billion-dollar pain point, exacerbated by artificial-intelligence-powered tools.
Loyalty program fraud and abuse are rampant across the restaurant industry, according to Dany Naigeboren, senior director of risk at Forter, an AI-powered decisioning and fraud-prevention platform that partners with companies like McDonald’s, HelloFresh and Grubhub. More than 85 percent of fraudsters on quick-service restaurant brands’ websites and apps are “returning fraudsters” who have made multiple attack attempts.
Forter is an AI-powered decisioning and fraud-prevention platform with 400,000 business partners across the restaurant and retail industries, among others.
“A lot of the restaurants are now trying to shift over customers from third-party deliveries to their platforms,” Naigeboren said. “So, that [fraud and abuse] will only increase because, in order to do so, they are obviously offering different promotions, etc. The second piece that we are seeing happening much more and is causing a lot of pain to our customers is around the fact that AI now allows people to send in images of supposedly damaged food.”
Naigeboren separated such loyalty program attacks into three categories: fraud, which could consist of criminals using stolen credit cards to pay for orders and then sell those to consumers looking for significantly discounted purchases; promotional abuse, including referral exploitation or individual consumers making multiple accounts to redeem rewards; and refund abuse, such as falsely reporting orders as incomplete or incorrect.
“Historically, quantification of issues was highly attributed to fraud,” Naigeboren said. “Within restaurants, the fraud itself—because it’s more difficult to monetize—usually isn’t that high. The piece around abuse is usually anywhere between four times and eight times more of a monetary loss problem for restaurants compared to fraud.”
Globally, loyalty program fraud accounts for roughly one-quarter to one-third of all digital fraud attacks, according to data from Open Loyalty. Juniper Research reported that financial technology and payment market experts estimate the issue will grow from $44.3 billion in 2024 to $107 billion by 2029.
“It’s still difficult to quantify, just due to various issues,” Naigeboren said of the scale of loyalty fraud and abuse in the QSR industry. “Firstly, sometimes identifying that some of your new customers are actually the same repeating abuser isn’t something that they would like to know—like, it’s not ideal for them on a marketing level. Secondly, I think that for them, especially with outdated fraud prevention systems, it’s more difficult for them to actually link together those repeating abusers.”
According to The 2026 Loyalty Report from Paytronix, 90 percent of loyalty program owners reported a positive return on investment, averaging 4.8 times the investment, with top-performing solutions boosting revenue by 15 percent to 25 percent annually from guests who use them.
Naigeboren said the problem of loyalty program fraud and abuse is particularly complex in the restaurant industry because consumers now expect promotions as a loyalty incentive to activate accounts on both first- and third-party platforms.
“Sometimes, because there are different operators and franchisees, a pain could be not felt on a macro level, while on a micro level, meaning a specific operator or a specific franchisee, could be feeling it immensely,” Naigeboren said. “In that sense, sometimes what does not surface on the overall QSR level is a pain of a specific operator.”
Naigeboren said that the issue of loyalty program fraud has progressed, as the threshold for committing such attacks has diminished immensely.
“Any person who wants to become an abuser within the food industry can do it now with agents, AI, etc., within minutes; usually, the sign-up process is very easy within this industry,” Naigeboren said. “This industry doesn’t want to introduce a lot of friction; [brands] want to provide you with a seamless experience. This allows repeat abusers access to this specific piece very easily.”
Because loyalty program abuse is a particularly tricky issue to address among restaurant partners, Naigeboren said Forter works with brands to determine their risk appetite (or risk tolerance) when dealing with users suspected of such attacks.
“Some brands have a higher tolerance or lower tolerance for abusers,” Naigeboren said, adding that restaurant partners may be more tolerant when launching in a new region or rolling out new menu items. “So, in that sense, we provide a lot of guidance, and we obviously provide the technology and tweak the decision according to their own appetite for abuse, but it’s for them to say how strict they want to be.”
Naigeboren said Forter alerts partners within their network if users have been identified as abusers in the past with other brands, without sharing which business that observation stemmed from.
“This is becoming almost a gamified area that’s causing a lot of losses for our partners,” Naigeboren said of loyalty fraud and abuse. “That’s why I’m saying that the number is probably up to a percent or a percent and a half, maybe, of the entire total processing volume (of a brand), because a lot of our partners and merchants at this point are still not able to even distinguish between the falsified images and the ones that are genuine where the delivery didn’t come as planned.”
