State Regulation of Loyalty Programs in Banking Sector

The article studies the impact of loyalty programs, in particular cash-back on economic activities of finance service consumers. It was underlined that in line with obvious benefits there are risks connected with insufficient transparency and aggressive marketing strategies. The authors analyzed available investigations in the field of cashback and loyalty programs highlighting key hypotheses concerning the impact of these tools on customer behavior. They substantiated the necessity of state regulation to protect customer rights and provide sustainability of finance market. The article put forward arguments in favor of strict rules and standards aimed at risk minimization and transparency rising. Concrete measures were elaborated necessary to upgrade loyalty program regulation, which can foster sustainable development of finance sector.