Gift cards have become a popular payment and gifting option due to their convenience, versatility and wide availability. Whether for birthdays, holidays or corporate rewards, gift cards are easy to purchase and use. However, their very nature also makes them a prime target for fraud and scams. This has led to increasing concerns among consumers and businesses about how to block gift card misuse and protect against fraudulent activities. In this article, we’ll explore the fundamentals of gift cards, the common scams that exploit them and practical ways to block or prevent gift card fraud.
Understanding Gift Cards
A gift card is a prepaid card loaded with a specific amount of money that can be used to purchase goods or services from a specific merchant or group of merchants. Gift cards are generally categorized into two types:
Physical Gift Cards: Traditional cards made of plastic, often sold at retail stores or supermarkets.
Virtual Gift Cards: Digital versions delivered via email or mobile apps. They contain card numbers and PINs that can be used for online shopping or mobile transactions.
Gift cards offer flexibility to consumers, allowing them to choose their preferred products or services. Businesses use gift cards to drive sales, increase customer loyalty and manage promotional campaigns. Unfortunately, the anonymous and irreversible nature of gift card transactions makes them a prime target for scams and fraud.
Common Scams Involving Gift Cards
Understanding the types of scams that involve gift cards is essential to recognize fraudulent schemes and to prevent becoming a victim. Here are some of the most common gift card scams:
Tech Support Scams: Tech support scams involve fraudsters pretending to be representatives from reputable technology companies. They convince victims that their computers or devices are infected with malware and that a service fee is necessary to fix the issue. The scammer then requests the victim to pay using gift cards, as this method is difficult to reverse once the information is shared.
Online Marketplace Scams: On online platforms, scammers may pose as buyers or sellers and manipulate victims into paying for items or services with gift cards. For example, a scammer might claim they can only accept payment in the form of gift cards or they might deceive sellers into refunding “overpayments” via gift cards.
Phishing and Email Scams: Scammers send emails or texts pretending to be from a trusted source, asking recipients to buy gift cards for business purposes, such as rewarding employees or clients. The victims unknowingly send the gift card numbers to the fraudster.
How to Detect a Gift Card in FraudLabs Pro
A gift card can be identified by its 6 or 8-digit BIN (Bank Identification Number) or IIN (Issuer Identification Number), which contains essential information about the card. This number indicates details such as the issuing bank, the country of issuance, the card type (credit or debit), and the specific subtype. The subtype helps distinguish whether the card is virtual, prepaid, a gift card or falls under another category. For further information, you can use an online Credit Card BIN Lookup tool.
In order to set up a rule for detecting or blocking gift cards in FraudLabs Pro, it is essential to have access to the BIN information. You can find this data on the transaction details page. However, keep in mind that not all e-commerce platforms share card BIN details, so availability may differ depending on the platform.
If the BIN information is available on the transaction details page, you can create a rule to identify gift cards on the Rules page. Simply search for the term “gift” to locate the validation rule titled “Credit Card Equal to Gift Card.” Depending on your needs, you can choose the appropriate action, such as placing the transaction under review or rejecting it outright. Please note that this validation rule is only available to merchants on the Medium plan or higher.
Conclusion
Gift cards provide significant convenience, but their frequent exploitation in scams presents real risks for both businesses and consumers. Gaining a clear understanding of how gift cards function and being aware of common scam tactics can help individuals and companies stay protected. With the right precautions in place, you can continue to benefit from the ease of gift cards while reducing exposure to potential fraud.