The retailer even executes a transaction flagged off by the fraud detection vendor as possible fraud if the risk involved is small and the customer is loyal.
Anything lower reduces the expected cost of criminality, without doing anything to improve the probability of detection. (Treating whistleblowers leniently is consistent with this logic: letting them off punishment raises the odds of truth-telling, and therefore of detection.) There are plenty of arguments against ultra-high fines, however.