March 9, 2022
Digital gift cards have become very popular. Unfortunately, they also have the highest fraud rate of all digital products.
The December 8, 2021, Federal Trade Commission (FTC) data spotlight addressed gift cards. Consumers lost $148 million due to scams using gift cards for payment.
So how do you prevent gift card fraud? Keep reading this guide to find how to fight back.
Hackers buy digital gift cards with stolen credit card numbers and resell them. Later, when the customer doesn’t receive their product, they request a refund. This creates a friendly fraud scenario, and the seller must pay chargebacks.
The FTC describes several common ways criminals trick people. With today’s technology, hackers use fake caller ids to pose as legitimate agencies such as the Social Security Administration.
They tell the person that their bank accounts are frozen while undergoing an investigation. Next, they instruct victims to buy gift cards to prevent getting arrested.
People also receive calls saying there’s a problem with their Apple or Amazon account. They tell the person to buy gift cards and send pictures of the card’s back to the caller.
Text or email messages are also sent claiming to be from the person's boss. They're told that he/she is stuck in meetings and needs them to buy gift cards for clients.
Scammers may define which company gift cards to buy and where to use them. The FTC reports that the most common stores are Apple, eBay, Google Play, Target, and Walmart.
Some criminals tell victims to make purchases at different stores while still on the phone with the scammer. This allows them to steal the money as soon as you enter the gift card number and security code.
eGift cards are anonymous, universal, transferable, and easy to access. Hackers don’t have to get into bank, credit, or debit card accounts. Gift cards are also harder to trace than other forms of payment.
Victims do the work, while criminals get the merchandise.
Vesta offers eCommerce fraud prevention and gift card fraud solutions. They use a proprietary risk decision engine and expansive database to reduce loss. The following describes strategies to reduce gift card fraud.
Fraud prevention platforms track gift card data. A common red flag behavior is for first-time buyers to place very large orders. Another is using different payment methods with one delivery address.
eCommerce sellers must practice website security protocols and specify gift card policies. Build secure “HTTPS” sites to provide customer data protection and prevent breaches.
Vesta’s ML tools watch purchase details including gift card numbers you sell. An open application programming interface framework checks the device, order, and payment data. It also analyzes behavioral attributes of the session and cardholder information.
This platform looks at two trillion data points for each transaction. The decision-making engines work with supervised and unsupervised ML. This ensures secure gift cards protection.
Today, businesses must prioritize tools to prevent gift card fraud. Vesta has offered proven, scalable payment protection solutions globally for over 25 years. We have the only instant, end-to-end transaction guarantee platform for online selling.
Our mission is to drive the true cost of fraud to zero worldwide. Our platform uses ML to reduce false declines and eliminate chargebacks.
We guarantee 100 percent payment of costs due to fraud for any transaction we approve. Request a free demo today to learn about our solutions.