Gift Card Fraud: Don't Let Thieves Steal Your BalancesThis holiday season, there’s no doubt that people are going to be giving a lot of gift cards. By the end of 2018, gift cards are expected to be a $160 billion industry, and about 40% of Americans hope to receive a gift card as a present. Unfortunately, there’s a chance that cybercriminals may put a damper on the holiday cheer you spread, as the gift cards you give may be targeted by hackers and have their balances drained before your giftees have a chance to use them. Gift cards are highly targeted by thieves and, unlike debit and credit cards, they’re not held to stringent anti-fraud standards. Some gift cards defend their balances better than others, though, so by choosing gift cards with the best security features, you can ensure your presents have more protection from crooks. To find out more about gift card fraud and discover what to look for in a secure gift card, keep reading.

Why cybercriminals love gift cards

According to a report by business risk analysis firm Flashpoint, cybercriminals’ interest in gift cards increased sharply after 2013. Hackers began gravitating more and more toward committing gift card fraud because they realized it doesn’t carry much risk, since law enforcement isn’t likely to get involved over stolen gift card balances, and because gift cards hold versatile value. Stolen gift card numbers can be sold in online exchanges, used by criminals themselves or even given as presents to friends and loved ones without incriminating them. Additionally, most gift cards are difficult to trace, which is one reason why scammers request payment in the form of gift cards so often. The majority of gift card numbers are anonymous, easy to trade and can be used at legitimate businesses without drawing any attention, making them almost as good as cash for many criminals.

Security features to look for in a gift card

Loss and theft protection: Credit cards provide an excellent level of protection against unauthorized purchases, but the same isn’t necessarily true about gift cards. If a fraudster steals a gift card’s balance, there’s a good chance the card issuer will refuse to refund or replace the card. To see if a gift card has loss protection, you can often find the terms and conditions of a card listed on its back, which should include the loss and theft policy. Try to shy away from cards that explicitly state they will not replace lost or stolen cards, as the merchants that issue those cards will likely be the firmest in denying balance replacements. After that, you may need to do a bit more research to see what documentation the issuer requires to process refunds or replacements, such as the gift card’s activation receipt. In general, it’s good practice to save any receipts you got when you purchased the gift card, and either include them with your gift or store them somewhere safe. Additionally, some merchants, such as Starbucks, will let you register your card online, which can afford you perks like balance protection.

Hidden PINs: Almost all gift cards have a PIN on the back, since PINs are a basic security feature at this point. However, not all gift cards hide their PINs, and exposed PINs are easier for criminals to steal. With an exposed PIN gift card, all a thief has to do is record the card’s number and PIN, and then periodically check to see if it’s been activated. Once it has, they can try to use its balance before the legitimate owner gets a chance to. If you’re buying a gift card in a store, check the PIN on the back to see if it’s covered with a sticker or scratch-off material, or if it’s visible. If there’s no cover on the PIN or it looks like the cover has been tampered with, skip that card and go for another one. Another thing you can do is check online to see if the gift card you’re buying can have its PIN changed by the owner, as switching the default PIN to a custom one can make it harder for thieves to access the card’s balance.

Secure balance check websites: Being able to check your gift card’s balance online is convenient, but hackers have found ways to exploit balance checking websites to drain gift card balances. If a balance check website isn’t secured, a hacker can use a program to automatically scan through gift card numbers, find activated ones with balances and then steal the numbers. With a magnetic strip writer, which are available on Amazon, a fraudster could even write a stolen card number onto a blank plastic card, effectively making a clone of someone else’s gift card that they can try to use in stores. Before you buy a gift card, go to its balance checking website and look for security features that verify the user is a person, such as a CAPTCHA. These features can severely limit the effectiveness of hacking programs, causing hackers to seek easier targets elsewhere.

Gift card fraud can be a dismaying crime, especially if it happens to a card you gave to someone else, but by sticking to cards with good security features, you can minimize the chances that criminals will ruin your holidays. To learn more about how to stay safe from swindlers during the holidays, follow our scams blog.