A new wrinkle on gift card fraud....
[hr style="width: 100%; height: 2px;"]Retailers face threat of gift card fraud
In recent years, the nation's retailers have been riding on the increasing popularity of gift cards. Now, they're discovering a big downside: gift card fraud. According to a recent National Retail Federation survey, 75 retailers that track gift card theft averaged almost $72,000 a year in losses due to gift card fraud.[/p]The survey, highlighted at a seminar Wednesday at the National Retail Federation's annual convention, revealed that the loss is higher among the 60 percent of retailers polled who have re-loadable cards. Overall, retailers estimate that 62 percent of gift card losses are due to dishonest employees; 13 percent to counterfeit cards and 13 percent to stolen cards.[/p] "Gift cards are being used as a currency," said Paul Cogswell, vice president of loss prevention and risk services at Comdata Stored Value Solutions, one of the nation's largest gift card producers and processors, in an address at the NRF convention.[/p]Cogswell noted that thieves steal credit cards and then buy gift cards with that money. That helps the crook "extend the life of a credit card," since most victims of stolen credit cards will immediately report a missing card.[/p]Another increasing common method is for crooks to make copies of a gift card purchased from a store, skimming the magnetic strip, Cogswell said. They then put the copies back at the store counter; every time these cards get activated upon a customer's purchase, it electronically puts more money on the thieves' counterfeit cards. Since most customers buy gift cards as presents, they won't be used for a while, giving these criminals plenty of time to spend the value of the card.[/p]For pawn shops, gift cards have become more valuable than merchandise, according to Cogswell. Cogswell estimated that pawn shops pay up to 50 cents on the dollar for a gift card; for merchandise, that figure averages around 25 cents to 30 cents on the dollar.[/p]
