Gift Card Fraud

Gift cards have emerged as a popular choice for gifts, offering convenience for both givers and recipients by eliminating the need to select specific items. The gift card market has experienced consistent growth, driven by the expansion of e-commerce and increased adoption by companies using gift cards as a form of recognition for their employees. Retailers benefit from gift cards as they provide a lucrative revenue stream and aid in customer retention.

However, the rise in gift card popularity has also attracted the attention of fraudsters seeking to exploit these cards for dishonest activities. Both gift cards and prepaid cards are vulnerable to manipulation, making them attractive targets for bad actors. While gift card fraud can occur in physical settings, there is a growing trend of digital gift card fraud.

Fraudsters employ various sophisticated techniques to carry out gift card fraud. For instance, they may utilize automated algorithms to systematically test potential account numbers and identify valid ones with available balances. Armed with this information, cybercriminals can deplete the card’s balance without the cardholder’s immediate knowledge, and in some cases, the crime might go unnoticed for extended periods or indefinitely.

Gift card fraud encompasses several different methods, some of which resemble other forms of card-not-present fraud, while others are specific to gift cards. A few common schemes involve using stolen account data, account takeover, exploiting loyalty points and rewards, and conducting phony balance checks.

Merchants and consumers must remain vigilant and implement robust security measures to safeguard against gift card fraud, ensuring that these convenient gifting options continue to be enjoyed safely and responsibly.