The Continued Rise of Gift Card Scams – And The Solution To Avoid Them
Jason Wolfe
CEO / Founder - Wolfe, LLC. | Entrepreneur | Several exits | Investor | Board Member | Philanthropy
I used to live and breathe gift cards as the previous owner of GiftCards.com. When I sold the company in 2016, we were the world’s largest online gift card website selling more than 10 million gift cards worth over $1 billion.
I believed in gift cards. I’d give them as birthday presents, thank you gifts, bonuses, you name it.
That was until I realized they were broken. Believe it or not, scams and fraudulent activity are often fueled by gift cards.
Stolen Gift Cards And Scams
I recently read an article about a postal worker stealing gift cards from the mail. In my former company we shipped millions of gift cards every year and, naturally, some went missing. When this would occur, the customer was protected and we would re-ship their card. However, we as the company lost money.
And let’s talk about the crew that was stealing state-owned gift cards meant to be distributed as an incentive for fulfilling an MDOT safety education program. Or the scammers impersonating the IRS and demanding payment by gift cards. According to the Federal Trade Commission, gift or reloadable cards were the top payment method for imposter scams within the first three quarters of 2019.
In-Store Gift Card Hacking
Do you know those gift card display racks at the grocery store? The cards on the stand typically have the card number exposed which allows easy access for hackers (even the strip covering the PIN can be compromised and replaced). Scammers then input the numbers into special software that notifies when a gift card has been activated. ‘"The crooks can see as soon as someone activates the card, because they've automated all this with software that periodically checks the card balance via the internet," says David Farquhar, a unit chief within the FBI's Criminal Investigative Division who explained the crime techniques to Consumer Reports last year.’
I really hope that you’ve never fallen victim to any of those scenarios. What it comes down to is that I don’t like knowing that gift cards are associated with fraudulent activity. So I’ve created GiftYa as a solution to the problem. GiftYa is linked directly to the recipient’s Visa or Mastercard so only the recipient can use it. The added bonus is that you can give a GiftYa to any national or local merchant across the U.S. For example, your big box department stores or even the local rock-climbing gym around the corner from your house.
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5 年In my old career, we ran into this problem often. ?First, it was that they never arrived in the mail. ?We actually had a few customers that received an empty, cut open envelope. ?It accelerated into the cards never being activated in our third-party retailer (or were stolen and not activated). ?Then it came down to tracking which cards were stolen and which cards we needed to keep an eye on to try and catch who took it (we did this a few times for people who had an idea of who stole them). ?We ended up having a long-running sheet with every card ever lost or stolen. ? It was a big task to manage!