According to the latest Gift Card Spending Survey by National Retail Federation, conducted by Prosper Insights & Analytics, holiday shoppers will spend an average of $163 on gift cards and certificates this year, 4% more than last year and the highest amount in the survey’s 10+ year history. The total spending on gift cards will reach an approximate $29.8 billion, quite a nice figure to hear as we grasp onto the holiday shopping season.
The convenience of gift cards is fantastic for both the gift giver and receiver. But as easy as it is to purchase a gift card and nice on the receiving end to get one, it comes with some potential high risk opportunities for scammers to take advantage of innocent consumers.
There were 3 gift card scams identified by Threat Metrix the Advanced Cybercrime Prevention Solutions Company.
Recent holiday gift card fraud scenarios include:
• Stolen Gift Card Web IDs – In this Scam “Cybercriminals fraudulently gain access to virtual gift cards, also known as eCerts, and buy goods and services that are then resold either outside the country or on auction sites,” stated ThreatMetrix
• Virtual Goods – “The gaming industry is thriving. Taking advantage of the possibilities it offers, cybercriminals steal online currency and virtual goods such as extra lives, levels and customized video-game features. With the release of two big-name video game systems – PS4 and Xbox One – this will be a hot racket this holiday season,” noted ThreatMetrix.
• Purchasing Gift Cards with Stolen Credit Cards – And finally in this situation “Using stolen credit card numbers, cybercriminals purchase gift cards online or in-store to buy physical goods, eg., clothing and electronics. Then they turn around sell the goods online or ship them for sale abroad,” ThreatMetrix said.
“If merchants fail to put preventative measures in place to protect against gift card fraud, it can be one of the greatest sources of revenue loss for merchants,” stated Carmen Honacker, Director of Customer Advocacy at Threat Metrix, in a press release about gift card fraud. “Gift card purchases using stolen credit cards have become so prevalent that some retailers have resorted to ceasing online gift cards altogether and only accepting cash in-store for gift cards.”
Now just because criminals see gift cards as a lucrative target, doesn’t mean that merchant account retailers have to shine away from selling them. “Retailers don’t need to miss out on these revenue opportunities due to the risk of cybercrime. With effective strategies and technologies in place to differentiate between authentic and fraudulent transactions, retailers can continue selling gift cards via credit card transactions and drastically decrease fraud attempts,” said Honacker.
Using the right collected information helps merchants tell the difference between authentic and suspicious gift card transactions. “Each merchant has different requirements for categorizing risk” said Honacker. “While The Network may generally set certain locations, as high risk, a given retailer may receive significant business from that location and can adjust the risk levels.”
If the retailer flags the gift card as high risk, the retailer will then recommend that the merchant do additional screening before accepting any transaction. This in turn will further protect both the retailer and consumer, which eMerchantBroker the #1 high risk merchant processor can help you out with.
Don’t detour from getting those gift cards your friends and family enjoy receiving because of potential scams. Like everything in life, you have to be aware of the risks involved, so enjoy the holiday season and may you prosper well into the New Year.
Looking for a merchant account?