The Onus of E-Gift Card Fraud Mitigation Falls on Retailers and Consumers03-October-2018
In today’s digital economy, fraud is a like a chess match—if you’re not focused on all of your pieces, you will be exposed. It is critical that retailers realize that fraud tactics are always changing. Because of this, it is imperative that your strategy is fluid, your technology is flexible and you are constantly monitoring vulnerabilities for the threat of fraud.
According to a 2017 survey by the National Retail Federation trade association, 60 percent of 7,349 surveyed participants had gift cards on their holiday shopping list. Because of this number, retailers were anticipating selling more than $27 billion worth of digital and physical gift cards this past holiday season. A catalyst for this growth is the emergence of e-gift cards.
For retailers, e-gift cards have become a tremendous revenue stream that help drive sales and allow consumers the flexibility to purchase products they want and need. From a fraudster’s perspective, e-gift cards are often an easy entry point to commit fraud.
As the holidays quickly approach and the sale of gift cards spike, it is critical that retailers take precautions now to avoid repercussions associated with fraudulent e-gift card activity. These costs include chargebacks, stolen merchandise, resources, time and brand reputation. These compounded costs can be significant and turn what looked like a successful holiday season into a horrible first quarter.
To protect against fraud, the onus is not just on the retailer, but also on the consumer. Today’s consumer needs to be educated regarding the topic of fraud and more conscious of their activity and the monitoring of their digital accounts. There are five easy steps that merchants should be communicating with consumers to help protect digital and physical gift cards:
- Buy gift cards online directly from the retailer, restaurant, or other issuer. This is extremely important for high-value gift cards.
- Don’t buy in-store racked cards with easily accessible numbers and PINs. The Retail Gift Card Association advises consumers to inspect the package for tampering.
- Change the security code as soon as you buy the card. Register the card when you get home, change the PIN, and use the funds on the card as soon as possible.
- Secure your home computer. Today’s fraudsters often gain access to your gift card numbers and PINs by hacking a personal computer. To help prevent that, make sure your security software is the most up-to-date version and create strong passwords.
The only thing that is consistent with fraud practices is that they are always changing. Fraud’s best practices are shared openly across the web and secondary sites support the deception. If merchants are not paying attention they will become victims and endure consequences in the short and long terms. Having a fraud prevention solution is not like an umbrella policy. Fraud is continually changing and has the ability to exploit weaknesses within an organization. As we prepare for the holidays, it is important that we act now so that the Grinch does not appear in the first quarter. Learn the twelve best practices to fight e-gift card fraud in Kount’s eBook “E-Gift Card Fraud: The Gift That Keeps On Taking”.