Finding a gift for someone can be extremely stressful, especially if you are usually not a fan of shopping. You spend endless hours trying to find a perfect present, browsing the online shopping websites or aimlessly walking through the shops. Or you could be a person who has a right present in mind at all times and actually adores the process of searching for it. No matter what your gift buying preference is, due to COVID-19 pandemic most of us will have to change our shopping plans for this holiday season and do most of the holiday shopping online. What better way to choose the best gifts for all of their friends and family than by utilizing gift cards. It is easy to find something for anyone as a large number of businesses are now offering gift card options, you can even get a Bitcoin gift card.
Not only is the gift card a great gift and is in some cases more preferred type of the gift since it gives the chance to gift card recipients to choose the perfect present for themselves but it also brings various benefits to the business owners such as convenience, higher profit levels, convenience and customer attractions and retention. Unfortunately, all of these benefits are also what makes them a prime target for the fraudsters.
What is gift card fraud?
Fraudsters keep finding new ways in which they can conduct their malicious actions and gift card fraud will always be one of their favorites. There are different types of malicious actions that fall under this category as the way SEON explains gift card fraud as any type of fraud that uses gift cards and vouchers.
Since they are anonymous, easy to buy and most importantly untraceable, fraudsters can use them without all the risk connected with different types of fraud. They can reap all the benefits while customers and businesses deal with the aftermath.
Gift card fraud can be divided in several main types:
Gift card chargeback – Fraudsters use stolen card details to buy gift cards which results in legitimate card owner requesting a chargeback.
Account takeover – Fraudsters gain access to user accounts through stolen credentials and use it to purchase gift cards.
Gift card return fraud – After the fraudsters purchase the item with stolen credentials they return it in exchange for a gift card.
Pay with gift card scam – this type of fraud exploits human nature to trust. Fraudsters trick innocent users to pay for non existent service
by purchasing a gift card.
Brute force bots – By using brute force bots, fraudsters try to discover the correct gift card numbers by testing out all the possible combinations in online stores.
How to protect your business from gift card fraud?
Keeping your business and your customers safe from gift card fraud should be a priority of any business that has gift cards in its offer. According to a new report from the Federal Trade Commission (FTC) up to September of 2021, nearly 40,000 consumers reported losing $148 million in gift card scams, but that number is significantly higher as less than 5% of gift card scam victims report the crime.
Luckily there are some steps you can take to protect your business against it:
Keep a track of gift card data – Monitoring and tracking gift card data not only helps to identify fraudsters but they can improve overall business success. You will be able to recognize legitimate purchase patterns and ways in which to improve them while also noticing any red flags that indicate fraud such as user activating gift cards immediately after purchase.
Conduct regular risk analysis – This helps you learn which risks your business might face and allows you to create an efficient plan for dealing with those risks.
Update your security protocol – Gift cards are often overlooked when it comes to the security protocols businesses have in place. It is time to update them and start considering gift cards as any other part of your business.
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