Stay Ahead of the Game: Smart Strategies for Gift Card Fraud Prevention for 2024

Gift cards remain a popular choice for both gift-givers and receivers in North America. Their convenience, flexibility, and ability to let someone choose exactly what they want make them a year-round favourite.  However, with this popularity comes a growing threat: gift card fraud. 

According to the Federal Trade Commission* (FTC), gift card scams accounted for over $217 million in reported losses in the US in 2023. This concerning number is projected to rise as fraudsters develop more sophisticated methods. The good news is that there are proactive steps businesses and consumers can take to mitigate this risk.

We'll delve into the various types of fraud, highlight red flags to watch out for and provide actionable tips to keep your gift cards safe. 

The Various Types of Gift Card Fraud 

Gift card fraud encompasses a wide range of deceptive activities. Here are some of the most common ones to be aware of for Gift card fraud prevention:

Imposter Scams

Fraudsters impersonate legitimate entities, such as government agencies, utility companies, or tech support, and demand immediate payment using gift cards. 

Physical Tampering

Gift cards are stolen from retail locations or during shipping. Fraudsters then alter the packaging or the card itself to drain the funds before the rightful owner can use them.

Charity Scams

Phony charities or fake fundraising campaigns solicit donations via gift cards. 

Fake Activation Websites/Phone Numbers

Deceptive websites or phone numbers trick victims into entering their gift card information, allowing fraudsters to steal the balance. 

Friend/Family in Need

Scammers pose as friends or family members in a seemingly urgent situation, requesting immediate financial assistance via gift cards.

Overpayment/Refund Scams

Fraudsters trick victims into overpaying for an item or service with a gift card, promising a refund that never materializes.

These are just a few examples, and as technology evolves, so do the tactics employed by fraudsters.  Staying vigilant is crucial to protecting yourself. 

Spotting the Red Flags 

Unusually High Purchase Quantities

Especially if involving multiple cards or suspicious locations. 

Unsolicited Gift Cards

Phishing scams often involve unsolicited gift cards sent via email or text message. 

Unexpected Gift Card Requests for Payment

Legitimate businesses typically don't request payment using gift cards. 

Tampered Packaging

Damaged or altered gift card fraud packaging could indicate the card has been compromised.

Phishing Attempts

Look out for typos, grammatical errors, and an overall sense of urgency in emails or websites requesting gift card information.

If you encounter any of these red flags, don't use the gift card. Report the suspicious activity to the issuer immediately. 

Gift Card Fraud Prevention for Businesses

Businesses that sell gift cards have a responsibility to safeguard their customers from fraud. Here are some strategies they can implement: 

Invest in Gift Card Secure Packs

Offer gift card secure packs that are tamper-evident and with the use of cold glue. This deters physical theft and provides peace of mind to your customers. 

Increase Protection with Security Labels

If you have budget constraints, choosing from a variety of security labels adds a layer of tampering visibility that could deter the fraudsters. 

Solidify Return Policies

Clear and concise return policies discourage fraudsters who might attempt to return stolen merchandise with a gift card. Consider offering limited return windows or requiring receipts

Stricter Activation Procedures

Implement PINs or additional verification steps before a gift card can be used. This adds an extra layer of security. 

Purchase Limits

Set limits on the number of gift cards that can be purchased in a single transaction, particularly for high-value cards. 

No Guest Checkout Gift Card Payments

Require account creation for gift card purchases to deter anonymous fraudulent activity. 

Invest in Fraud Prevention Technology

Software solutions utilizing machine learning and advanced analytics can help businesses identify and prevent suspicious activity related to gift cards. 

By implementing these strategies, businesses can take strong action to protect their bottom line. 

Consumer Tips for Safeguarding Gift Card

Consumers also play a vital role in gift card fraud prevention. Here are some tips to keep your gift cards secure: 

Purchase from Reputable Retailers

Avoid buying gift cards from online marketplaces or street vendors. Stick to established retailers you trust.

Protect Your Information

Treat your gift card information like cash. Never share your gift card number or PIN with anyone you don't trust completely.

Record Your Information

Store a copy of the gift card number and PIN in a secure location separate from the card itself.

Be Wary of Unsolicited Gift Cards

If you receive a gift card from an unknown sender, don't use it. Report it to the issuer immediately.

Contact Authorities and Monitor Credit

If you suspect you've been a victim of gift card fraud, take action.

Contact your bank

Inform them of the potential fraud to protect yourself from further financial loss. 

File a police report

Documenting the incident with local law enforcement can be helpful for insurance purposes and future legal action.

Report the scam

The Federal Trade Commission (FTC) in the US and the Canadian Anti-Fraud Centre (CAFC) collect data on scams. Report the incident to the appropriate agency in your country.

Consider credit monitoring

Signing up for identity and credit monitoring services can help you detect fraudulent activity early on.

By following these tips and remaining vigilant, you can significantly reduce your risk of falling victim to gift card fraud. Remember, a little awareness goes a long way in protecting your hard-earned money and ensuring your gift cards bring joy to the intended recipient. 

Gift cards can be a fantastic way to show someone you care.  By implementing the strategies and tips outlined, both businesses and consumers can significantly increase Gift card fraud prevention . Working together, we can ensure that gift cards remain a safe and convenient way to give and receive the perfect present. 

About Plasticard – Locktech International

PLI is the largest Closed Loop Gift, Loyalty and Hospitality card manufacturer in North America. PLI has been in business for over 30 years, specializing in end-to-end card marketing solutions including card production, design, packaging, displays, consulting and fulfillment services and capabilities. PLI has three manufacturing facility locations including two in Las Vegas, NV and one in Asheville, NC.

*Source: Tableau public