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Wednesday, November 20, 2013

Helping to prevent holiday gift card fraud

The National Retail Federation recently predicted holiday gift card sales will reach $29.8 billion in 2013, an all-time high in total spending. Upon hearing the projection, ThreatMetrix, a provider of integrated cybercrime solutions, was quick to point out that criminals see gift cards as an increasingly lucrative target.

Following are three gift card schemes identified by ThreatMetrix as ones fraudsters will likely employ this holiday season:

  1. Stolen gift card web IDs: In this case, “cybercriminals fraudulently gain access to virtual gift cards, also known as eCerts, and purchase goods and services that are then resold for profit outside the country or on auction sites,” ThreatMetrix said.

  2. Virtual goods: In this situation, “fraudsters take advantage of the thriving gaming industry to compromise online currency and steal virtual goods – such as extra lives, levels and customized features in video games – for personal profit. This will be especially prevalent this holiday season with the release of two big-name video game systems – PS4 and Xbox One,” ThreatMetrix stated.

  3. Purchasing gift cards with a stolen credit card: In this scheme, cybercriminals use stolen credit card numbers to “purchase gift cards either online or in-store. Physical goods such as clothing and electronics are then purchased with the stolen cards and sold online or shipped abroad and sold at a higher price for profit,” ThreatMetrix noted.

“If merchants fail to put preventative measures in place to protect against gift card fraud, it can be one of the greatest sources of revenue loss for merchants,” said Carmen Honacker, Director of Customer Advocacy at ThreatMetrix, in a press release about gift card fraud. “Gift card purchases using stolen credit cards have become so prevalent that some retailers have resorted to ceasing online gift cards altogether and only accepting cash in-store for gift cards.

“However, retailers don't need to miss out on these revenue opportunities due to the risk of cybercrime. With effective strategies and technologies in place to differentiate between authentic and fraudulent transactions, retailers can continue selling gift cards via credit card transactions and drastically decrease fraud attempts.”

With the holiday season set to kick into high gear, discussing gift card fraud prevention strategies with merchants is one way ISOs and merchant level salespeople can add value to their clients and prospects – and solidify business relationships in the process. end of article

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