Money for Nothin' - Gift Card Fraud Still a Key Issue for Retailers
The explosive growth and popularity of gift cards has been a revenue windfall for the retail industry, especially when factoring in the associated add-on purchases, as well as "breakage," which is the industry term for an unused portion of a prepaid card. But despite the positives, there has always been one persistent negative: gift card fraud.
Over the years, thieves have naturally evolved with the gift card industry. The early technique of gift card skimming still remains an issue. This is a fairly sophisticated caper that typically involves a thief taking an image of the codes from multiple cards on a card kiosk and then putting them back in place for purchase by regular customers. Many of these cards have an 800# used to check card balances, so the culprit checks these numbers, waiting for any of them to show a balance. Once that occurs, the thief will use a counterfit card (or simply input the code if an internet purchase) with identical numbers to commit the fraud. When the real card owner tries to redeem their card they will find a $0 balance.
Recent card fraud trends are even simpler. In one reported scheme, a thief will purchase a prepaid gift card with his credit card and quickly spend the balance on the card. The thief then contacts his credit card company and claims he never made a gift card purchase, thereby having the charges reversed from their credit card, but pocketing the merchandise without payment.
Another dirty trick is one that is foisted upon unsuspected online auction winners. When one "wins" a merchandise auction, the seller requests payment with gift cards equal in value to the agreed upon price of the sale. Never agree to this! The perpetrator will spend the gift card balances immediately and never send you the merchandise that you are due -- leaving you with no recourse.
If your company is concerned with gift card fraud, talk with CardSuppliers about how we can help resolve this issue through secure packaging or custom solutions.
