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How a Fraudster Can Turn eGift Cards into $7,000 in 7 Minutes

posted on: Fri Oct 13 2017

eGift CardSecondary gift card marketplaces provide a number of convenient ways for legitimate owners of unwanted eGift cards to exchange them for something they do want.

  • Peer-to-peer exchange. Consumer #1 has card A but wants card B. Consumer #2 has card B but wants card A. Marketplace facilitates an equitable, trusted exchange between the two.
  • Peer-to-peer purchase. Consumer #1 has unwanted card A. Consumer #2 wants card A. Consumer #1 uses marketplace to facilitate an equitable, trusted sales transaction of card A to consumer #2.
  • Direct sale. Consumer has unwanted card A and want cash. Consumer sells unwanted card A directly to marketplace for cash. Marketplace holds card A in inventory for future transactions.
  • Direct exchange. Consumer has card A but wants card B, marketplace has card B from previous direct sale/exchange and accepts card A from consumer in an equitable, trusted exchange between the consumer and marketplace.
  • Direct purchase. Consumer wants card A and marketplace has card A from previous direct sale/exchange. Marketplace sells card A to consumer in an equitable, trusted transaction.

Unfortunately, fraudsters can exploit the beneficial liquidity and fungibility provided by secondary gift card marketplaces in order to turn stolen eGift cards into fast cash. The scenario below illustrates just how quickly and easily this can happen:

Fraudster Chart

With this kind of easy money, it’s no surprise that eGift cards were the #1 targets of fraud attacks between Black Friday and Christmas (out of all the products sold by its merchants in 2015, according to a leading payment processor).

If you’re one of the 8 out of 10 online businesses that offer eGift cards, download the eBook “eGift Card Fraud: The Gift That Keeps On Taking” and find out how you can protect against eGift card fraud, while still safely selling more of these popular holiday gift offerings than ever before.