Gift cards are a valuable tool for boosting revenue and customer loyalty, offering convenience and flexibility to shoppers. However, like any payment method, they can also attract fraudsters looking to exploit vulnerabilities. The good news? With the right strategies in place, you can protect your business and customers while maximizing the benefits of your gift card program.
This guide breaks down the most common threats and the best strategies to combat them - let’s dive in.
Why is gift card security important?
Gift cards are a popular and convenient way for customers to shop and gift, and their ease of use makes them a favourite among shoppers. However, their flexibility also means they can be a target for misuse - as with any payment method. By understanding how they are used, businesses can take proactive steps to ensure they remain a secure and reliable payment option.
How to keep your gift card program secure:
We’ve kept this simple - here are the most effective ways to enhance security while keeping your program customer-friendly.
1. Put strong security measures in place
- Use tamper-resistant packaging for physical gift cards.
- Fraudsters often attempt to manipulate gift cards in-store by recording card details before they are activated. Tamper-resistant packaging helps prevent this by adding a physical barrier that makes tampering more difficult and obvious to both retailers and customers.
- Consider using scratch-off PIN covers or holographic seals to add another layer of security.
- Require activation at the point of sale.
- Gift cards should not hold any value until they are purchased and activated at checkout. This ensures that stolen or compromised cards remain unusable.
- Implementing activation codes tied to receipts can add an extra level of protection, preventing unauthorized use of lost or stolen cards.
- Keep an eye on redemption trends to spot anything unusual.
- Unusual redemption patterns, such as multiple high-value redemptions in a short period or redemptions from unexpected locations, can be signs of fraudulent activity.
- Setting limits on the number of transactions or total value that can be redeemed within a certain timeframe can help mitigate risk.
- Implement automated alerts to flag suspicious redemption behaviour so that potential fraud can be addressed quickly.
2. Train your staff to spot fraud
- Educate employees on common scams and how to respond.
- Establish clear policies for handling suspicious transactions.
- Encourage staff to report any suspicious behaviour immediately.
3. Strengthen digital gift card security
- Implement two-factor authentication (2FA) for online purchases. However, with digital gift cards it's always a balance between removing friction for the customer while having just enough to keep fraudsters at bay. It’s all about striking a balance between security and convenience.
- Instead of just 2FA, you can also use risk-based authentication, such as requiring additional verification for high-value or unusual transactions.
- Last, but not least, the key player here is AI-powered monitoring. AI helps by:
✅ Detecting patterns of fraudulent activity in real-time.
✅ Flagging suspicious transactions before they are processed.
✅ Analysing vast amounts of transaction data to identify anomalies.
✅ Adapting to emerging fraud tactics by continuously learning from new data.
✅ Reducing false positives, ensuring that legitimate transactions are not unnecessarily blocked.
4. Monitor for unusual activity
- Track bulk purchases of gift cards - while high-volume orders may be normal for certain use cases, unexpected spikes in consumer transactions can be a red flag for others.
- Flag high-value redemptions made in quick succession.
5. Collaborate with law enforcement and industry networks (like the GCVA and RGCA)
- Share fraud trends with other retailers and security firms.
- Work with cybersecurity experts to stay ahead of threats.
- Report fraud cases promptly to prevent further abuse.
How we help retailers safeguard their gift card programs
We take fraud prevention seriously, offering an industry-leading approach to securing your gift card program from transaction risks and chargebacks. Our tailored fraud prevention solutions work proactively to stop fraud before it impacts your bottom line.
🔹 Customised fraud protection – We leverage AI-powered machine learning to detect and block suspicious transactions in real time. Our payment rules are tailored to each retailer, blocking high-risk transactions while keeping legitimate sales flowing.
🔹 Multi-layered security approach – Our fraud detection goes beyond simple transaction blocking. We implement:
- Transaction authentication on all payments, shifting liability for fraudulent chargebacks to the card issuer.
- Bot protection methods at checkout to prevent bot attacks and automated fraud attempts.
- Billing information verification, ensuring that only authorised users can complete purchases.
🔹 Smart payment review process – we enable a flexible fraud management strategy by offering human transaction reviews for flagged payments. This ensures that potentially fraudulent purchases are assessed individually, preventing unnecessary declines while maintaining strong security.
🔹 Proactive chargeback management – Chargebacks can be a costly burden for retailers. We help mitigate these risks by:
- Monitoring chargeback trends and adjusting fraud prevention strategies accordingly.
- Providing ad-hoc detailed reporting on chargebacks, offering insights into root causes and prevention strategies.
- Handling chargeback disputes, preparing and submitting evidence to card issuers to challenge fraudulent claims.
🔹 Seamless program management – Let our experts handle the complexities while you focus on sales. With our help, you gain access to:
- Regular fraud prevention updates based on real-time transaction data.
- Industry insights and benchmarks to help shape your risk management strategy.
- Scalable fraud protection, adjusting security measures based on seasonal and market trends.
Looking for ways to strengthen your gift card program? Get in touch with us today. 🚀
With our advanced fraud prevention tools and hands-on expertise, you can confidently offer gift cards while minimising risks. Let’s keep your business secure, your customers protected, and your revenue growing!
