How to Detect and Prevent Gift Card Fraud

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When store managers detect gift card transaction anomalies, they may attribute those to cashier error, rather than investigate what happened. That’s one reason why gift card fraud is a popular entry-level crime.

In 2019, U.S. consumers spent about $178 billion on gift cards. Some of those gift cards end up forgotten in a junk drawer, and some are used immediately. And some gift cards become targets for thieves, which can result in losses for businesses and consumers.

Cracking Down on Gift Card Fraud

Consumers may attempt to use their gift card, only to find it has a zero balance, which is usually an indication that a thief somehow accessed the gift card and used the funds. Often, a cashier is involved in gift card fraud, so should you receive any customer complaints about zero-balance gift cards, check your POS records and video surveillance to see if the same cashier is associated with multiple zero-balance gift card complaints.

Follow these best practices to minimize the risk of gift card fraud:

Keep gift cards secure

Rather than keeping gift cards openly accessible on the store floor, display gift cards behind the counter or under video surveillance. Keep the area clean and organized.

Look for signs of tampering

With all your gift cards in one area, you should be able to review the packaging carefully. Check for opened packages or bent cardstock packaging.

Create a stringent gift card policy

Train your employees to follow a detailed gift card policy.

  • Only apply gift cards that are present. (Do not accept numbers written down or memorized, or photographed copies.)
  • Require receipts and ID for the return of gift cards.
  • If a customer brings back a gift card because it has a zero balance, check transaction records for the cashier who rang the sale.

A thorough retail loss prevention program can help you prevent gift card fraud and other types of internal and external loss.

Author information

Jim Close is the National Account Manager at DIGIOP. He previously served as DIGIOP’s Loss Prevention Manager.