This is an interesting observation. What kind of statistical strength does your average factor hold? For example, is there a significantly large spread? Can the average be biased or skewed based on particular demographic factors which may apply to Velocity?
It's important to note I don't own or work for an airline, and the models I've run are on other loyalty/rewards businesses.
To remove the noise and work with robust data I used members who had been active and engaged in one or more attempts at gaming the system. For my purposes, this was anyone who had made a points transfer, points redemption or spent hard currency with our service. It's a broad range.
This seems to contrast with the poster you quoted who feels a sense of injustice and rage against those members who cheat / defraud the system, and (in a manner similar to the biblical parable of the prodigal son) you're suggesting that Velocity would benefit financially to keep these customers.
Velocity is not out of pocket except for if the consumer would otherwise have paid cash for the same ticket. Industry statistics show most 'loyalty fraud' redemptions are converted into digital goods and services with premium cabins next. Therefore the member likely wouldn't have paid cash for a revenue ticket anywy. If points were redeemed onto
Virgin Australia flights, then VA actual profited from the exchange.
Of course, even if some members believe it is unfair to have "cheats" in the system, they are unlikely to leave the FFP themselves as a result of that rage. The only way I can think it would make them leave is if the presence of cheaters impedes their ability to achieve their goals in the FFP, e.g. redeem premium seats. That said, there would need to be data (perhaps that is difficult to capture) that would show that the proportion of prized premium seats are garnered by those suspected as "cheating" the system. But that in itself wouldn't mean taking "cheaters" out of the system would make it easier to get those seats, as it may indicate faulty technique (or "luck") on the part of those who complain being unable to get those seats.
'Cheating' is the wrong word. Remember, any frequent flyer point sitting in a Velocity member account has already generated earnings for the program.
There is nothing illegal, fraudulent or immoral. No 'cheater's, hackers or scams. The only alleged wrongdoing is the member activity was against what Velocity lays out in terms and conditions which they dreamed up themselves.
Not excusing whatever activity the members caught up engaged in, but once you kill off a member - they're gone for life. Along with their family, businesses, future employment, and a host of other worthwhile factors (see my last reply re: partners).
In addition to this, why not soft suspend the account and call the member?
Warnings? Was the member even aware this was against the terms?
Invite the member in for a chat about why they were engaging in activity which breaches the T&C and learn from what could be improved both on prevention and further developing the product.
I would be rather surprised if those who are suspected of "cheating" significantly fall in the demographic with a propensity to lose their dishonest gains via breakage.
I agree they probably wouldn't. Breakage is one of many revenue strategies.
I would, however, as a partner of Velocity, be concerned if Velocity is suspending accounts without proper due analysis. Partners (e.g., banks) are the ones paying for points to be in the member's account, and if the Velocity account becomes suspended, then my business with that customer is also in jeopardy.
I'm hoping we don't know the full story because it's not adding up from a business perspective.