Overview
The purpose of this article is to inform Boulevard customers about the increase of online fraud that is impacting multiple industries in the U.S. specifically when it comes to online purchases and one of the biggest targets that fraudsters look for are purchasable Gift Cards online.
Reports & Statistics
Per Mastercard’s Ecommerce Fraud Trends and Statistics report published in 2022; the United States has the highest fraudulent transaction value globally, accounting for over 42% of E-commerce fraud.
Per Security.org’s 2023 Credit Card Fraud report; 151 million American credit card holders are victims of fraud.
Gift Card Fraud
Gift Cards are a target for fraudsters who use stolen credit card data to make purchases online due to the fact that the purchaser typically will not come in contact with the business as they are buying the card for someone else.
Fraudsters can use stolen credentials to buy themselves Gift Cards and the name on the card will typically not match who is receiving the Gift Card. Due to this, the fraudster will make the purchase for a certain amount (ex: $500) and book services right away before the actual cardholder or business takes notice. It is only after the Gift Card has been used and the services have been rendered that the cardholder realizes that their card has been used fraudulently and they issue a dispute which alerts the business to the Fraud.
It is very difficult for a business to Win a dispute that has been commenced due to the use of a fraudulent card being used and Gift Card purchases are a common way for fraudsters to get away with their scam.
Awareness and Prevention
Fraudsters will buy online Gift Cards for 1-2 Purposes:
They will use stolen card data to buy a card for themselves.
They will buy them using a stolen card and sell them to other fraudsters, or unsuspecting buyers via marketplaces such as Facebook, to use.
Red flags to look out for regarding Online Gift Card purchases:
The Gift Card is purchased and used the same day. Fraudsters do this to benefit from using the card before the actual cardholder realizes their card has been stolen/used and issue a dispute.
The name of the cardholder buying the Online Gift Card is the same name as the person coming in for services. A person shouldn't have a need to buy themselves a Gift Card.
Multiple Gift Cards being purchased (no matter what the amount is) using the same card and cardholder name whether it is for the same person or different people.
Odd email addresses being used that have no correlation to the name of the person assigned to the Gift Card (ex: dirkwatercheese123@gmail.com)
Ways to help catch online fraudsters in the act:
Require that any Gift Cards bought online that the purchaser be required to send you a copy of their photo ID (Driver's License) to check against the card used. If the names don't match, refund the purchase and deactivate the Gift Card. If they won't send you an ID, do the same thing.
Check the ID of the person coming in to utilize the Gift Card and you also have the right to make a copy (keep it behind lock & key) in the case that the Gift Card is disputed as fraudulent. You can file a report with your local authorities and provide them with a copy of the ID to circulate as the fraudster is probably doing the same to other businesses in the area.
Items to consider:
Limit the dollar amount a person can purchase online (i.e. $100-$200) and require any Gift Card purchases over X amount need to be bought in person and a photo ID is required.