3rd February, 2022
Gift cards are loved by everyone – customers, recipients of gifts, retailers etc. Unfortunately, the list includes fraudsters, too.
Gift card-related fraud is on the rise. The associated fraudulent activity indicates so – the options for purchasing gift cards have widened, and so have the instances of the fraud and scams.
Fraudsters tend to be crafty when it comes to #giftcard fraud, mentioned Shelley Hunter, during a webinar by LSA. She shared that fraudsters plan their fraudulent activities in several ways – victim-assisted gift card fraud (when a customer is betrayed into giving their own money or financial access to a criminal and the victim ends up facilitating these scams), account takeover, good customer buys a “bad card” or scammers get access to a card in advance and wait for activation, and bad customer buying a “good card”, for instance, using a stolen credit card to commit the fraud.
Todd Tomlin shared details related to types of gift cards. These include a closed-loop gift card (a branded card with option to gift card at the store or merchant listed on the card) and open-loop gift card (use at a variety of businesses), and their distribution.
It has to be understood that the fraud economy is a well-connected system, pointed out Kevin Lee, VP Trust & Safety, Sift. Lee explained how fraudsters run and are a part of an illegitimate marketplace, how they interact with each other, how they offer their services.
Benita Johnson spoke about catching bad actors and protection of gift cards from them or when any anomaly is seen in the usage.
It is important to look at options like machine learning, real-time alerts and detection etc. Also, the industry needs to look into the perception that there is comparatively less stringent protection for gift card users or buyers compared to some other payment options. Is it true that gift cards do not have many of the security features that credit cards have? How is the gift card set up maintained or how secure is the same?
Shelley also spoke about how to handle certain precarious situations, especially when it comes to communicating with victims or genuine customers who have been cheated. The emotional quotient with gifting is quite high and these customers need to be “heard” and helped in the best possible manner.
Think of 99% who are real customers and how they should be engaged for an optimal experience, and also counter the remaining the 1% which is potentially trying to game the system or indulge in the fraudulent activity, underlined Lee.
Don’t give up, don’t shut the gift card offering, rather fight it out, summed up Tomlin.
By Ritesh Gupta
Ai Team
