There are many different types of people when it comes to shopping for gifts. Some people just don’t have time to search for gift ideas, others are not confident in their abilities to choose a great gift and there are some who waited for too long before buying a present, so the physical gift wouldn’t be able to arrive in time. Whatever their reason is, more and more people are turning towards the ease and convenience of gift cards and vouchers, the ultimate last-minute gift ideas.
According to research conducted by the National Retail Federation ( NRF) 54% of consumers surveyed said they would actually prefer to receive gift cards this holiday season. But those consumers are not the only ones who like the convenience of gift cards and vouchers.
Fraudsters also love how easy and convenient it is to use gift cards or vouchers for fraud.
What is a gift card fraud?
Gift card fraud covers any type of fraud that is conducted using gift cards and vouchers. This is a common fraud as the gift cards are usually not only anonymous but also untraceable. They are also extremely easy to trade and let’s not forget how easy they are to use. There is no need to fill all the additional details you need to fill in when buying with credit cards. You just need to enter the card number in the field which makes it extremely easy for fraudsters to use.
There are several different types of gift card fraud and these are the 4 most common types:
Gift card chargeback – Fraudsters purchase gift cards with stolen credit card numbers and the merchant unknowingly issues the gift card. After the original card owner notices the transaction, they will request a chargeback to a merchant.
Gift card return fraud – Fraudsters will use a stolen credit card to purchase the item from a store and then return it in exchange for a gift card.
Pay with gift card scam – Fraudsters use this type of fraud to trick unsuspecting people to pay for a service like a utility bill or bank charge by purchasing a gift card and giving them all the details they need.
Brute force bots – Fraudsters use this software to crack the gift card numbers by testing out all the possible confirmation in online stores.
What can you do to stop gift card fraud?
Some of these fraud attempts can be stopped by using common sense like the “pay with gift card scam” but for the other you would need to take certain steps if you want to stay safe and protect your business.
1. Track the gift card data
By having an internal system for tracking the gift cards that can be used in your store you can notice certain patterns or even notice some duplicates and reduce the risks of your company being affected.
2. Limit the number of gift cards in a single transaction
Fraudsters love gift cards, especially when they are using stolen credit cards. By limiting the number of gift cards customers can purchase in a single order, you reduce the damage a fraudster can do to your business.
3. Keep an eye on Gift card trading sites
As more and more stores have begun to offer gift cards, gift card trading sites have increased in popularity as they give people a chance to swap or sell unwanted gift cards. But fraudsters are also using these sites and not only innocent shoppers and by monitoring those sites and recognizing the patterns you can anticipate the gift voucher fraud and use these insights to protect your business.
4. Update your security protocol
You need to protect your gift cards just like you would any other aspect of your business. By implementing proper security protocols you can significantly reduce not only the risk of gift card fraud but also the other types of cyber threats.
Gift cards and vouchers bring benefits not only to the customer but also for the businesses. It just takes all the hassle out of shopping for presents for customers, and gives the businesses a chance to reach a wider audience especially now when most of the businesses have discovered the benefits of digitalization. But with these benefits, comes responsibility to keep your business and your customers safe from the risk of fraud. Educate yourself about the risks you are facing and take necessary steps to prevent them.