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Keep Online Gift Card Orders Safe from Cyber Fraud

While it’s often argued that giving gift cards is “impersonal”, it turns out that the majority of people are fine with it, since they continue to be quite popular among customers. Gift cards, unfortunately, are popular targets for scammers and fraudsters. In this article we tell you how to keep online gift card orders safe from cyber fraud.

Gift cards appeal to customers because of their flexibility and convenience, and merchants appreciate customers who purchase them. Gift card fraud can expose firms to costly chargebacks from the credit cards used to purchase them. How can businesses safeguard themselves – and their consumers — from gift card fraud? You will know soon!

The most important thing is to understand how fraudsters use gift cards so you can take safeguards to reduce the risk and empower your customers to keep their money safe.

Gift card sales were over $160 billion in 2018, and the figure continues to rise year after year. Despite the hazards, it’s understandable why businesses would want to give gift cards: customers demand them, they enhance sales, and they may be an effective marketing tool.

Why Gift Card Fraud Grows in 2021?

Many businesses have been forced out of business as a result of COVID-19, while others have been forced into primarily online responsibilities. Similarly, shoppers are increasingly spending time purchasing online. While e-commerce was already on the rise before to 2020, the worldwide lockdowns accelerated that expansion.

In 2021, merchants and customers will face a whole new set of challenges when it comes to commerce.

Card-not-present (CNP) transactions are on the rise as a result of the rise in online purchasing, making gift card theft that much easier. Gift cards are being used by more criminals than ever before, whether through a stolen card number or another scheme.

Furthermore, many online retailers, such as Apple, Google, and others, accept gift cards in exchange for things in their individual online stores. Online games now accept a variety of gift cards, giving con artists even more opportunities to steal goods and services.

Keep Online Gift Card Orders Safe from Cyber Fraud

Types of Gift Card Fraud

Gift cards are anonymous, difficult to track, easy to convert to cash or resalable goods, and widely available. Even better for criminals, they aren’t subject to the same stringent laws that apply to credit and debit card transactions. It’s no surprise that gift cards have been the target of so many different scams.

If you want to know different gift card scams, read this article.

Some of the most common ways that fraudsters steal your gift card credit is as follows.

Gift Card Refund Fraud

Be careful when a consumer wants to return a purchase and wants the money transferred to a gift card. It could be part of a strategy to harvest money from a stolen gift. Fraudsters make an online purchase with a stolen card number, then return it for a refund and request that the cash be transferred to a gift card.

Ordering Gift Cards with Stolen Cards

Scammers and thieves use stolen card numbers to buy gift cards and use or resell them before the business receives the inevitable chargeback. This is one of the most straightforward ways for a fraudster with stolen payment credentials to make a quick money.

The most common type of gift card fraud is also the most straightforward one.

Account Takeover

When fraudsters acquire access to a customer’s account, they may be able to make purchases using stored payment details without restriction. Customers typically receive an email verifying any purchase, thus this type of fraud is often identified before the goods is delivered out.

Physical Gift Card Theft

When you sell physical gift cards in stores, you’re vulnerable to a variety of schemes that involve tampering with the cards. While there are a number of safeguards in place to prevent this, most of them are relatively easy to circumvent for determined or experienced fraudsters.

One approach involves duplicating the barcode of one gift card onto other cards, allowing the fraudster to access funds when buyers purchase and activate the cloned cards.

Summary

Now you know how to keep online gift card orders safe from cyber fraud. The majority of single-store gift cards are untraceable. Visa prepaid cards, for example, are linked to credit card networks. Credit card scammers could face fines of up to $250,000 and ten years in prison. The seller’s refund procedures for stolen gift cards vary. Some retailers may be able to cancel the stolen gift card and give a refund or replacement, while others may not be able to do so.

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