Gift cards have become one of the most popular gifts during the holiday season. The gift card market, including the increased use of digital gift cards, has grown steadily over the years due to the expansion of e-commerce offerings that meet consumers’ needs for convenient, oftentimes digital-first experiences. In fact, the gift card market is poised to reach over $1 billion by 2027.
Gift cards (both physical or digital) and prepaid cards have always been a favorite target among fraudsters. Gift card scams are so widespread that the Federal Trade Commission (FTC), IRS, and even the Social Security Administration routinely warn consumers about the threat posed by gift card scams. While the individual consumer needs to be wary of gift card scams, so should online retailers and other enterprises that utilize gift cards. For those online retailers and enterprises, gift cards present an opportunity for scammers to use them for fraudulent purposes.
What eCommerce Should Know About Gift Card Fraud
Gift card fraud is appealing to the fraudsters because it is as easy as stealing cash without the need to go through any authentication. It not only disrupts the shopping experience of the consumers, it also damages the brand reputation of the retailer. While gift card scams, and the fraudsters behind them, usually get the headlines during the holiday season, these scams remain a year-long issue that need to be defended against.
Both physical and digital gift cards…
