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Fraud Fundamentals for eCommerce Retailers (archived)

Updated: Aug 23, 2019

(archived post. View original)


The flexibility and ease for consumers to purchase and use gift cards is what makes them one of the most requested gifts year after year. Their flexibility and desirability is also why they’re a favorite of fraudsters. For many merchants who are just launching their gift card program, the idea of tackling fraud can feel overwhelming. By having a basic understanding of key fraud best practices and utilizing support likely already available, merchants can significantly reduce their risk for digital fraud.


Make sure your card is set up for success and has security essentials.

It’s simply not enough to have a randomized card sequence. Both digital and physical cards need to have PIN numbers to stop potential fraudsters from sequencing card numbers. For physical cards, the PIN should be concealed and left for the owner of the card to scratch off.


Require more than the basics.

When attempting to fraudulently purchase digital gift cards, fraudsters are trying to capture as much value as possible in as little time as possible, which often means skipping standard fields such as the gift message. Requiring a minimum character count for the subject line and gift message can quickly throw off a bot. Additionally, when investigating possible fraud, looking at the amount of time spent on the gift card selection page can help. If it is a real consumer purchasing a gift card, it’s likely they’ll spend time picking out a card and developing it.


Pay attention to balance checks.

One of the most common fraud tactics is to run bulk card numbers through a balance check. An easy way to fight this is to include captcha checks and restrict the number of balance checks from an IP address within a specific amount of time. These simple prevention methods can serve as a first line of defense to keep fraudsters from redeeming live cards.


Know your program so you know what to look for.

Although gift card fraud can happen with both physical and digital gift cards, retailers should pay close attention to their digital card sales trends. Digital cards are much more sought after and susceptible to fraud because unlike physical cards, there’s no delay from when the card is purchased to when it’s active and available for use. Purchasing and spending thousands of dollars of fraudulent digital cards can happen in a matter of minutes.


For eCommerce based retailers, it’s likely that most gift card sales are of digital cards. When this fact is combined with the fact that most fraud happens via digital cards, it’s easy to see why fraudulent purchases can be harder to spot. That’s why it’s also important to look beyond just the card type and check for spikes in denomination amounts. For most merchants, denominations over $200 can be an indicator of possible fraud especially when combined with other factors. In contrast, a sudden surge in smaller denominations can also be indicative of fraud. Because every brand and gift card program is different, it’s essential to regularly review reporting to know what is normal for your brand.


Pay attention to resellers

It’s nearly impossible to keep your brand off of a gift card reselling website or marketplace, and this is especially true for fraudulently purchased gift cards. Re-selling a card at a steep discount is one of the easiest ways for fraudsters to get rid of the ill-gotten goods for cash. Regularly checking reseller sites and marketplaces can add an additional level of insight into possible fraud.


Given the multitude of ways a fraudster can acquire gift cards, staying up to date on the latest technology and best practices is crucial. This year’s Flourish Conference will feature some of the most cutting edge technology and services available to secure your gift card program. Learn more now. If you’re a merchant or retailer, email hello@flourishcon.com for an exclusive discount.

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