I left academia years ago and am self-employed, but haven't stopped refereeing papers for one of the journals I published a few papers in. Now I've been informed by the editors that I've been selected as a distinguished referee. They are going to send me a certificate and publish a note honoring me and the other distinguished referees.
Here's the catch: I haven't updated my institutional affiliation on their referee portal since I left academia, so they believe I am still employed by the last institution I worked at. And they are going to include that institution in the honoring note as my affiliation.
I'm afraid that if I notify them that I am actually not employed by any institution, they will change their mind and withdraw the award from me, for it would look super weird if they published a note honoring someone outside academia as their distinguished referee. To inform me about their decision to withdraw the award, they might just refer to some allegedly existing internal rules so that I couldn't really complain.
But if I don't inform them about that, it will create a potentially troubling situation both for me and for them, for the institution might react, "Hey, this guy left us ages ago, so would you please publish a correction."
I really want this award, so I want to avoid any risk of getting it withdrawn. After all, I've been selected on the merits of my reports and have done great service to the journal. And the award would look really nice in my CV as a recognition of my expertise.
What should I do? Is there indeed a risk of getting the award withdrawn if I play it straight and tell them I am not employed by any institution? Should I rather ask my last institution whether they don't mind if I use them as my affiliation to get the award? Or should I try to arrange some affiliation with some institution asap, e.g., as a self-funded visiting scholar?
UPDATE: I feel I have failed to bring my point across, so I'd like to explain why exactly I think the editors may withdraw the award. Of course, the editors have no doubts about the quality of my reviews. It was the main criterion. The real problem is this: how will it look if the editors, in effect, publicly admit to sending manuscripts for review to an individual who is outside academia and not affiliated with any institution or even a business company? It raises questions and thereby somewhat undermines the reputation of the journal. To make things worse, I haven't published anything since I left academia years ago. The editors know about my expertise from my reviews, but how can the scientific community know? So, I'm afraid the editors may get simply unwilling to trigger unnecessary questions or rumors in the community by giving me the award.
More broadly, I think the honoring note is not only a thank you to referees, but also a way for the journal to show off, "Hey, look who is refereeing for us - Great People from Great Institutions." It's supposed to add to the reputation to the journal. And giving the award to someone outside academia does just the opposite, no matter their actual expertise. It's simply a move against the reputation of the journal. My last institution, where the editors believe I still work, has a big name, and I'm afraid this may have been a hidden factor. Also, I went through the list of all past recipients of this award and found no one unaffiliated with any institution.
So, despite the three answers suggesting I should play it straight, I am still not really convinced it's the wisest move. There are relatively ethical workarounds mentioned in my question. I even think that telling nothing might actually be not a bad idea. Even if the institution asks to publish a correction - which is not very likely - the award will have already be given to me, and I will have no problem admitting to having left the institution and having failed to update my affiliation data. After all, I did work there.
I hope my point makes better sense now, and I'd appreciate more insights, especially from people who worked on editorial boards.
UPDATE 2: Thanks for all of your answers. I am going to play it straight. And it has occurred to me there's one strong reason for the editors not to withdraw the award: if they do, this will put them in bad light if I spread information about it.