The growth in overall online gift card sales is one of the factors contributing to the surge in gift card fraud. Fraud follows money, no matter where it goes. Gift cards are a relatively enticing target due to the rising encryption of card payments, which is another issue.
Online gift card transactions increased along with e-quick commerce’s growth as a result of COVID-19. There was an unexpected increase in the number of people seeking a simple method to send gifts to loved ones they might not be able to see in person. In this blog, we will focus on the various tips on how to identify and avoid gift card fraudsters
What are Gift Card Fraud?
Gift cards should not be used to make purchases. Anytime someone asks you to use a gift card as payment, they’re tricking you. Due to their accessibility to the public, gift cards are a favorite among scammers. In comparison to certain other payment methods, they also offer fewer buyer safeguards. They function more like currency since the moment you use a gift card, the value is forfeited.
Gift cards should never be used to pay anyone over the phone who demands payment in the form of gift cards. Once fraudsters have your money and the gift card information and PIN, they are in control.
What Makes Gift Cards so Popular?
Finding a thoughtful gift for a loved one doesn’t require people to spend hours browsing through a maze of shops. E-commerce gift cards come with a gift code that the retailer assigns that may be used to redeem the card’s value. If the gift card is only good for online purchases, you can input the code during checkout, or you can add the money when you pay by adding it to your store wallet.
Gift cards are simple for customers to use and simple for retailers to cash in on. Giving out gift cards has a number of benefits, one of which is the possibility that the receiver would have never ever considered visiting your store.
Additionally, it’s possible that they did not appear at all on your list of potential customers. You never know they may end up representing your company as endorsers.
Read: QR Code Attacks: Phishing and Its Vulnerabilities
How to Recognize the Gift Card Fraud
Only fraudsters attempt to persuade you to pay using gift cards. You can escape the scam and aid others in doing the same if you know how and when to recognize their tricks. The following is a list of typical gift card fraud and schemes:
Caller Claims Authority
The person on the other end of the phone claims to be from the authorities, like the Social Security Administration. They claim that you must pay fines or taxes.
Callers Posses as technical Support
A technical support caller may identify themselves as coming from Apple or Microsoft. They claim there is a problem with your laptop or a computer and that you must pay them to solve it. However, it’s a falsehood.
Dating Site Scammers
You meet a particular person on a dating site; nevertheless, they later beg for your assistance because they require money. This romantic con man invents any tale to get you to give them gift cards. Regardless of whether someone sends you money first, you should never send them money or presents unless you’ve met them in person.
Caller Posing as Friend/Family
The con artist poses as a friend or family member in need and requests money immediately — but begs that you keep it a secret. This is fraud. If you’re concerned, stop the call and give the friend or family a call to make sure everything is okay.
Read: The Future of Payment Technology; Contactless and Cashless Options
You are informed that you have won a reward, but you must first use a gift card to cover any associated fees or other costs. No reputable company or organization will ever require you to pay using a gift card. However, did you actually compete in the contest?
Caller Posses as a Utility Company Representative
The caller claims to be from your electricity provider or another utility organization. If you don’t pay right away, they’ll threaten to halt your service. Utility businesses, however, don’t operate that way. It is a con.
Someone hands you a check that is significantly larger than you anticipated. They want you to deposit the cheque and then provide them with a gift card for the shortfall. Not at all. Your money will be lost because that cheque was a forgery.
How Can You Avoid Gift Card Fraud
Online gift card purchases. Purchase the cards directly from stores, companies, or even other issuers. These cards are not readily available to criminals. This is essential when you’re buying a gift card with a large value.
Avoid purchasing in-store cards with PINs and numbers that are simple to guess. If you need to buy a gift card at a physical store at the eleventh hour, search for ones that are stored behind the counter or in tightly sealed packaging.
Check a large selection of cards and the bar-code numbers to determine if there are any copies or if the packaging has been interfered with if the cards are displayed in the open on a rack. Purchase your cards elsewhere if the cards are not visible to security cameras or store staff.
Read: 7 Best Ways to Protect Your Customer’s Personal Data
Change the security code on any cards you get as gifts as immediately as you can. Once you return home, activate the card, modify the PIN, and use the funds immediately. The likelihood that a balance will be stolen by a cybercriminal increases the longer a card is left unused.
Attempt to recover any stolen money. Some card issuers have cybersecurity defensive systems in place, and they might be able to tell whether someone is using your gift card legitimately or fraudulently. Therefore, phone the card’s issuer and request a refund if your card has been compromised.
Conclusion
E-commerce gift cards are popular among fraudsters because the harm they may wreak is virtually limitless. If a firm is compromised, criminals may access hundreds of cards simultaneously, which is impossible with one time virtual payment cards. As a result of having to honor gift cards that shouldn’t have been in circulation, the retailer stands to lose the most in this scenario. Merchants may miss out on merchandise, never be paid, and even have to handle chargebacks and reimbursements for transactions with dubious provenance.
Related Articles you Might be Interested in:
Where to Get a Trusted Gift Card
