Gift Cards are Convenient for Businesses — and for Criminals
Gift cards are a common holiday gift for businesses to give their employees or customers because of the one-size-fits-all appeal. However, prepaid gift cards are also a perfect target for criminals. Gift cards are easily stolen and numbers can be hacked from retailer systems and stolen from stores in advance of purchase. It’s important to be aware of criminal tactics so you can buy the right cards from the right retailers.
Thieves spot an opening
Gift cards offered by credit-card companies are commonly used by organized crime, including street gangs, because they often have no load limit and can be used to withdraw cash at ATMs. No bank account is needed — which means funds loaded and withdrawn aren’t traceable. In fact, these types of cards are accepted as valid currency between some crime syndicates.
Their use in money laundering makes the cards particularly attractive to thieves. So you might want to buy only cards issued by individual retailers.
Stealing from stores
Though less risky, retailer gift cards are also vulnerable to theft. Fraud perpetrators might copy or photograph gift card numbers in stores and then wait for people to buy and activate them at the cash register. They can monitor card numbers online and when the accounts become active, spend the balance or convert it into cash via a third-party card redeemer before the gift card recipient gets a chance to spend it.
Cards that include PIN numbers hidden by a scratch-off coating can be more secure. But thieves have been known to steal these cards, scratch off and record the PIN numbers, re-coat the numbers and return the cards to store racks.
Criminals can also get hold of gift card numbers by hacking the systems of major retailers. One of the latest methods of stealing many cards at once is to use a bot (a computer program that works automatically) to scour the Internet for gift cards with balances.
If you decide to give gift cards this year, take steps to protect them. Buy cards only from reputable retailers and avoid buying them off open racks that are easily accessible to fraud perpetrators. Also encourage your gift recipients to redeem their cards quickly. The longer they wait, the more time thieves have to deplete their balances.
If you have questions about preventing fraud in your business, JLK Rosenberger can help. For more information, call us at 949-860-9902 or click here to contact us.