Where there are a different customer and invoice account on a sales order, it's possible to earn points against the customer account loyalty card but the system attempts to redeem these against a loyalty card linked to the invoice customer account.

There is a parameter (Commerce shared parameters > General tab > Validate customer to redeem loyalty points) which looks as if it should control this behaviour, but Microsoft has confirmed that the parameter has no effect.

The current situation is as designed but illogical as customers can earn but not redeem these points. The parameter behaviour should work such that in this scenario it allows the points to be redeemed against the customer account whilst lodging the payment and settlement against the invoice account