Gift Card Fraud Prevention: Types, Examples & Detection

According to Federal Trade Commission report indicates that scammers predominantly favor gift cards as their primary payment method. This preference has resulted in consumers reporting a staggering $148 million in stolen funds.

If gift card fraud is prevalent, you should learn how to protect yourself and your business from these scams. In this article, we will tell you how with 22 strategies for gift card fraud prevention.

Exploring Gift Cards & Gift Card Fraud


A gift card is a prepaid stored-value card that can be used as an alternative to cash for purchases within a particular store or group of affiliated stores. They are typically issued by retailers or financial institutions and can be loaded with a specific amount of money, which the recipient can then spend at the designated store or online platform.

Gift card fraud refers to any criminal activity involving the illegal acquisition, use, or manipulation of gift cards for financial gain. This can occur through various methods, including theft, counterfeiting, skimming, phishing, or exploiting vulnerabilities in the gift card system.

Types of Gift Card Fraud & How They Work

Each of these types exploits vulnerabilities in the gift card system, whether through physical theft, technological manipulation, or social engineering tactics. Here are some common types of gift card fraud and how each of these types work:

9. Card Not Present Fraud


Scammers use stolen credit card information to purchase gift cards without the physical card, AKA card not present fraud. This leads to chargebacks for merchants.

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Operations

Criminals use skimming devices to steal information from gift cards at the point of sale, allowing them to create duplicate cards or use the stolen information to make purchases online.