An End-to-End Approach to Combating Gift Card Fraud

As a leader in the prepaid card industry for more than 30 years, InComm Payments has been at the forefront of developing new innovations and approaches for preventing gift card fraud. Our commitment to fraud prevention continues today with investments in packaging techniques, monitoring technologies and industry partnerships. To learn more, we sat down with Rob Hadden, our SVP of Fraud Ops, and our fraud prevention team to hear their insights on how we protect prepaid cards against threats.

Give us an update on the current fraud prevention landscape. How has it evolved?

Protecting against fraud continues to be a major area of focus across the global payments industry and certainly for us at InComm Payments, where we are relentless in innovating and evolving our fraud prevention strategies. Fraudsters are constantly changing their tactics, and the unfortunate reality is that in recent years their activities have become more sophisticated, with much of it now tied to larger organized crime networks, often with overseas connections. The industry has seen an uptick in theft of card balances (which some media reports have referred to as “card draining”) and package tampering, but we have fought back hard and combat the fraudsters by developing best in class anti-fraud measures and working closely with law enforcement and retailers to prevent, identify, and respond to fraudulent activity. Thanks to our efforts, we have seen significant reductions in fraudulent activity and remain vigilant against future threats.

How are InComm Payments and the gift card industry addressing the latest fraud challenges?

Collaboration across the gift card ecosystem, from banking partners to merchants, continues to be critical. As a partner-centric organization, InComm Payments works hard to ensure that we are providing retailers with the technology, support, and education they need to deploy security best practices. This includes end-to-end fraud prevention in our products; educational programs, resources, and training; partner events, like our recently held annual Gift Card Summit, which often include experts from law enforcement and government agencies; and sophisticated 24/7 monitoring of activity on our card products.

Our industry also works in close collaboration with law enforcement to help identify and prosecute the criminals that are responsible for fraud. InComm Payments was engaged from the start of the federal government’s most recent investigation into fraud activity alongside other industry members, and we regularly partner with the DHS, FBI, IRS, DEA, Secret Service, and others to combat these threat actors. We are committed to leading the industry in these areas, working to share information, insights, and data patterns, and spreading the word on fraud prevention innovation.

Is gift card packaging the most important element of fraud prevention? What else is involved?

Tamper-resistant packaging is undoubtedly an important facet of protecting gift cards from fraud – and an area where we have led the charge through patented innovations. But while packaging is one important element of security, decreasing criminal activity and protecting consumers requires a combination of several initiatives, each of which is critically important and all of which are used by InComm Payments.

At InComm Payments, our approach deploys a robust set of tools at every stage of the gift card experience lifecycle, from the physical security of the card to activation and all the way through redemption. These include strong back-end controls to detect unusual activity, geolocation technologies, and real-time 24/7 monitoring of card activity at a global level. Our end-to-end approach enables us to be nimble and responsive, identifying anomalies and suspicious activity in real time and allowing our teams to react immediately. And we roll out new features on a regular basis to combat the evolving tactics that organized crime networks are continuously attempting.

How do you partner with retailers to combat fraudulent activity?

We know that loss prevention is a challenge for retailers across many product categories, not just gift cards, so part of our commitment to them includes providing substantial guidance and support and educating them on our latest packaging capabilities, back-end monitoring, and behavioral attribute recognition. We also use their feedback to inform our practices. Some of our most successful efforts have been when we work hand in hand with our retail partners to implement controls and processes, which have a meaningful impact in reducing attack rates and losses following deployment. It all comes down to trust: retailers are on the front lines, and they know they can count on us to support them.

What can consumers do to protect against gift card fraud?

The best thing consumers can do is be vigilant for known warning signs and keep purchase information to ensure rapid resolution in the event of an issue. We always encourage users to inspect the card packaging before purchase to identify any signs of tampering, such as any missing or altered packaging components. Consumers should also be alert for victim-assisted fraud – i.e., scammers impersonating trusted authorities who ask for payments via gift card – and should not provide card information to unknown or suspicious individuals.

We also strongly encourage card-buyers to keep their receipts, and to include the receipt with the cards when giving them as gifts. This enables us to expedite the resolution process if an issue does arise. By the same token, we encourage cardholders to reach out to us immediately if they notice an issue with their card. The sooner we learn of a potential issue, the sooner we can resolve it.

We encourage people to read more safe shopping and fraud prevention tips, including these resources from the Innovative Payments Association and the Federal Trade Commission.