Gift card fraud prevention

3 min read

In just 3 years, gift card fraud losses have grown by 364%. This should raise concerns for any businesses selling gift cards. The need for gift card fraud prevention measures has never been higher. In today’s post, we will explore gift card fraud and the measures your business can take to mitigate the dangers. 

Popularity of gift cards

Gift cards have become increasingly popular in the service industry. From luxurious hotel experiences to fine dining, they're the go-to gift for those who want to share and gift memorable moments. 

However, in the same way you'd protect your most valuable possessions, it's crucial to ensure the security of these gift cards and have robust gift card fraud prevention measures in place.

Gift card fraud

Imagine gift cards as keys to exclusive hotel suites. When you purchase a hotel gift card, you're essentially investing in a future staycation or a weekend getaway. These cards hold significant value, and like any valuable asset, they can be a target for unscrupulous individuals. This is where gift card fraud prevention comes into play.

Think of it this way: just as a high-end hotel invests in top-notch security to protect its guests and assets, you should also invest in safeguarding your gift cards. 

In the following sections, we'll delve into the world of gift card fraud, exploring the tactics employed by scammers, learning how to spot red flags, and discovering the best practices to protect your cherished gift cards. 

Why do scammers want gift cards? 

Gift cards are a quick way for scammers to obtain cash. They can use the card to buy items or sell them for cash. 

Scammers prefer gift cards because it's hard to trace the funds once they've been spent, allowing them to remain anonymous. 

Additionally, gift cards are easy to acquire and buying several during the holiday season won't raise suspicion.

Gift cards have less protection for buyers than other payment methods, which means that transactions may be irreversible. 

How does scamming cards work?

Scammers often employ a variety of tactics to pilfer the value of gift cards. 

Stealing gift card codes

With retail gift cards, one common approach is to scratch off the protective covering on the card to reveal the unique code. They then note down this code and wait for the card to be activated. Once it's loaded with funds, they drain it, leaving the legitimate recipient with an empty card.

Regarding gift experiences for services, some scammers will also try to duplicate gift cards and use number pattern recognition to predict valid gift cards to steal. 

Phishing 

Another devious method is through phishing emails or phone calls. Scammers may pose as legitimate businesses or organisations, claiming an issue with your gift card and that they need the card number and PIN to resolve it. Once they have this information, your gift card's balance can quickly vanish.

In the upcoming sections, we'll guide you on how to spot these red flags and, most importantly, how to outsmart these crafty scammers, ensuring your gift cards remain safe and sound.

Spotting the Red Flags

In this section, we'll help you, as a gift card seller, recognise the warning signs of gift card fraud. Our goal is to provide you with clear and concise information to ensure the security of your gift card operations.

As a seller of gift cards, it's vital to be vigilant to protect both your business and your customers:

  1. Suspicious Shopping Behavior: Pay attention to unusual activity, such as an unusually high number of purchases, which might indicate fraudulent behaviour.
  2. Customer Communication: Educate your customers about not sharing gift card information via unsolicited emails or phone calls.
  3. Verify Your Website: Ensure that your online platform is secure and that customers purchase or redeem gift cards on the official site.
  4. Consider Using a Gift Card Management Platform: Explore options like Enjovia to help monitor and identify suspicious purchases. This platform can be a valuable asset in safeguarding your gift card operations.

Next, we'll provide you with further insights into how to protect your gift card inventory and what steps to take if you encounter potential red flags in your role as a gift card seller. 

Security

How Businesses Can Prevent Gift Card Fraud 

For reliable gift card fraud prevention, consider Enjovia. Enjovia is a gift card service provider that utilises robust security features combined with the following measures to ensure the security of your gift cards: 

1. Secure Payment Gateway 

Enjovia utilises secure payment gateways to protect transactions, making it as reliable as a bank vault.

2. Anti-Fraud Detection Measures 

As well as the security in the payment gateway, Enjovia also uses anti-fraud detection systems that monitor purchases and swiftly halt suspicious activity—creating a double layer of protection against fraudulent activity. 

3. Random Unique ID

With Enjovia, all gift cards are assigned a completely random and unique ID number and code. There is no patterning to the voucher codes, making it impossible to predict a number sequence that could be used in fraud. 

With no regular format on the voucher IDs, Enjovia is distinct from many other gift card systems.

4. Easy Redemption Process- Reducing Human Error

Using a gift card redemption process is paramount. However, the redemption of gift cards must be quick to access and simple to check the status of the gift card being cashed in. 

Enjovia ensures an easy redemption process, safeguarding against multi-use or duplication of gift cards. 

When there is pressure on queues at the checking-in/ out desk, staff can become overwhelmed and skip checking the status of gift cards.  - Preferring to redeem gift cards later when there are no lines of people waiting. But, doing this gives rise to a number of fraudulent gift cards being used. 

Enjovia mitigates this issue by providing fast logging into the redemption system. With quick staff sign-in and QR code scanning, gift cards can quickly be identified. Therefore, allocating a new status to the gift card in real-time. - with no extra pressure on the other waiting customers.

Frequently Asked Questions

How do I protect my gift card from fraud? 

To protect your gift card, store it securely, use it promptly, and be cautious of unsolicited requests for card information.

Can you get your money back if you get gift card scammed? 

Unfortunately, it's often challenging to recover money lost to gift card scams. Promptly report the scam to the issuer for any possible recourse.

Can gift card fraud be tracked? 

Yes, gift card fraud can be tracked through transaction records, enabling authorities to investigate and potentially apprehend scammers.

How do I protect my gift card? 

Protect your gift card by keeping it safe and using a reputable gift card management platform for added security.

Are gift cards security-protected? 

Many gift cards now include security features like unique IDs and QR codes to enhance security.

Where is the security on a gift card? 

The security on a gift card typically lies in the unique ID, PIN, or activation code, often found under a scratch-off panel.

How do thieves activate stolen gift cards? 

Thieves may activate stolen gift cards by using various methods, including scratching off and copying activation codes before legitimate activation.

Is there a CVV on a gift card? 

Gift cards usually don't have a CVV (Card Verification Value) like credit or debit cards.

How do you authenticate a gift card? 

You can authenticate a gift card by verifying the unique ID, PIN, or activation code provided by the issuer before use.

What happens if a business goes out of business and you have a gift card?

It is important to know that there may be situations where your gift cards cannot be used. This is dependent on the store and the reason for its closure. When companies file for bankruptcy, they can only accept gift cards if they request permission from the bankruptcy court and if it is granted.

Conclusion- Gift card fraud prevention

In conclusion, safeguarding your gift cards, whether in the service and hospitality industry or beyond, is vital in today's digital landscape. 

By adopting secure practices, such as using reputable gift card management platforms like Enjovia and staying vigilant against suspicious activity, you can fortify your defence against potential fraud. 

The importance of these measures cannot be overstated, as gift card fraud can have significant financial repercussions. To sum it up, protect your gift cards like valuable assets and stay alert to ensure a secure and enjoyable gift card experience.

For more information on how to increase the security of your gift cards, see our post on Gift Voucher Law.

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