Gift cards make for a safe and convenient way to pay and give gifts. This is evident by their popularity and widespread use. The National Retail Federation reports that gift cards are the most widely used gifts in America, with 14 consecutive years of popularity. They also offer rewards and incentives. Fiserv reports that 64% of Americans buy gift cards to be used for their own personal use. Unfortunately, fraudsters are also a common problem. Criminals can also abuse gift cards without having the right safeguards.
Fraud with Credit and Debit Cards
Fraudsters take credit card information and then use it to purchase gift cards, merchandise, travel and other unauthorized purchases. VOUCHAIN creates a decentralized infrastructure to support retailers and shopping centres, facilitating voucher issuing. It also facilitates management and administration, which leads to tangible benefits and increased efficiency across the value chain.
To get a refund on a gift card, criminals can steal products and then return them to the owner.
Fraud in Account Takeover
Hackers gain access to customer’s online accounts and can steal their gift card data, allowing them to transfer or drain the balance.
Victim Aid Fraud (Elderly IRS, Tech Support Scams).
Scammers pretend to be grandchild, IRS or tech support team members and demand payment in gift cards.
Social Engineering/Internal Fraud
Retail employees are often targeted by criminals who trick them into activating stolen gift certificates, giving data to redeem them, such as gift card numbers or PINs, and granting access to merchant registers by pretending to be part of the IT department that maintains the equipment.
Fraudsters can steal or alter gift cards’ numbers and/or PINs in shops. “Skimming,” a form of product manipulation, is called.
Fake Fraud Claims
In an attempt to get compensation from retailers and gift card exchanges, fraudsters claim they are victims of gift card theft.
Fraud in Access to Upstream Systems
Fraudsters gain access to gift card processing systems, distribution centres, and stock locations that create or store digital and physical card information.
These are fraud prevention strategies we recommend to our members in order to protect their programs and customers.
Card Data & Technology
* Gift cards can now include random PIN codes.
* Use technology to flag suspicious activity prior, during and following activation and redemption.
* Use complex algorithms to prevent the replication of gift card data.
* Online service providers are used to develop algorithms that can determine if a purchase has been made by a cardholder, fraudster, or both.
* Only use supply chain partners who adhere to strict security protocols when handling inventory and card data.
* Multi-factor authentication (MFA), which adds an additional login step to verify that the person accessing or using gift cards is the owner of the balance.
* Use software such as CAPTCHA or bot managers to purchase gift cards and register them.
A CAPTCHA (Comprehensive Automated Test for Privacy and Trust) is a program that separates human input from machine input. It protects websites against bots that steal gift card data.
* Protecting card data, magnetic strips, and gift card PINs with packaging techniques
* Use print and material techniques to make it difficult for counterfeit gift cards.
* Train cashiers on how to inspect gift cards packaging for tampering, before selling to consumers. Watch out for suspicious buyer behavior, such as large purchases of gift cards, and other indicators that may indicate fraudulent activity.
* Ensuring that gift card sellers do not sell or activate gift cards with PIN numbers.
* Having a set of escalation procedures to quickly respond to fraud when it occurs so that you can shut it off.