11/06/2023

’Tis the Season for Fraudsters and Gift Card Scams

PYMNTS

The holidays are upon us, and gift cards remain a favorite to give and receive.

And the fraudsters lie in wait — armed with advanced technologies and sophisticated schemes.

Doriel Abrahams, head of risk at Forter, told PYMNTS in an interview that gift cards have always been riskier than other payment form factors.

He noted that, for instance, food and beverage retailers see only 5% of their “traffic” tied to gift cards — and yet those same cards account for 50% of fraud they encounter.

Gift cards have become an attractive target for fraudsters due to their easily monetizable nature. Using stolen credit card information, fraudsters can purchase gift cards, which can then be resold or used for purchases. Gift cards provide fraudsters with a level of anonymity, as they can be sent electronically or used directly in-store. And there are generally no chargeback options, which makes it virtually impossible to recover funds.

“A gift card is essentially the online world’s version of cash,” he said. Of course, fraud can compromise the actual physical cards, too, as fraudsters can record gift card numbers and PINs with only a slight bit of tampering.

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