When Loyalty is no longer loyalty: Unveiling the dark side of customer loyalty programs

This study aims to explore the relationship between customer loyalty and unethical customer behavior (UCB) within the context of loyalty programs, specifically the causes, dimensions and consequences of UCB.
By applying a qualitative research approach, 15 semi-structured interviews were conducted with frontline employees from various companies. The findings reveal that UCB within loyalty programs is primarily made up by perceived unfairness, opportunism, entitlement and verbal abuse. Typical causes range from personal, psychological to situational triggers, but also specific loyalty program characteristics are seen as drivers. The results indicate that unclear communication, excessive promotional complexity, and inconsistent program rules foster unethical behavior. Consequences mainly affect frontline employees through stress and emotional exhaustion, while companies experience minor financial losses.
This study contributes to a deeper understanding of how loyalty program design and management can unintentionally encourage unethical behavior. Theoretically, the study extends existing models of customer misbehavior to loyalty program contexts. Practically, it highlights the need for clear communication, simplification of offers, and transparent program structures to reduce unethical behavior and enhance customer trust.
The study is limited by its qualitative nature, industry focus, and single-coder analysis, restricting generalizability. Future research could benefit from a larger, more diverse sample and the inclusion of quantitative methods to validate and extend the findings.