CNP Fraud and Gift Cards: Avoid Being a Two-Time Loser
Are you a retailer who sees a 300% increase in gift card sales at this time of year? After all, 53% of consumers buy gift cards as holiday gifts, and forecasters are projecting a 9% increase in gift card sales to $42.8 billion this holiday season (i.e., 34% of the total $126 billion gift card purchases expected in 2014). That’s the good news.
The bad news? The most prevalent type of fraud in the gift card space is fraudsters using stolen credit cards to buy gift cards and then reselling the fraudulently-obtained gift cards. If your gift card sales triple during the holidays, couldn’t fraudulent transactions for gift cards increase that much, too? And with the huge amount of “weaponized” data out in the marketplace (due to the breaches at Home Depot, Target, and others), it will be tougher than ever to identify first-time fraudsters.
The worse news? If you’re not able to recognize fraudulent charges until the chargebacks hit 60 days later, the gift cards obtained fraudulently in November and December will be spent long before you react. That means you face a financial double whammy:
- Lower revenues for 2014
- Higher fraud losses in 2015
The good news? There is a way to fight back. Kount Complete™ includes a unique technology called Dynamic Scoring/Rescoring that continues to check up on every CNP transaction, and alerts you if subsequent behavior reveals the card to be stolen or fraudulent. Instead of waiting 60 days, you can suspend privileges for that fraudulently-obtained gift card in just a few hours, and save the cost of the chargeback, plus the loss you would have taken from the gift card being used.
You’re probably thinking: it’s too late to add more fraud protection now (the last thing you need is an IT project right before the holiday onslaught). More good news! Kount is a SaaS solution that can be up and running in days, even hours. So it’s not too late. So if gift cards are a big part of your holiday sales, you may want to request a demo of Kount Complete as soon as possible.