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Food for thought. How to stop Gift Card fraud?

Food for thought. How to stop Gift Card fraud?

Old Dec 18, 14, 8:30 pm
  #1  
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Food for thought. How to stop Gift Card fraud?

90% of all our MS is from gift cards. I'm sure I am not the only one who is feeling the noose tighten as stores stop selling them for credit. Its getting harder and harder. I think that in 6 months most stores in my region will not allow me to purchase. Even if they do, not at my current volume.

We also know that none of these restrictions are due to MS. Its all a response to fraud. So how do we stop this?

Lets open up the forum for some suggestions. I feel like the people behind the Gift Cards are idiots, since there are so many different things they can do to deter the illegal activity.

For example, the following could be done behind the scenes without affecting the POS systems at stores:

1. Put a 7-10 day hold on all gift cards over $50 after purchase.
2. Install velocity limits on draining the cards. Maybe increment by 10% of the balance each day until the 10th day.

Such methods would still allow us to MS ( We would just have to let the cards sit for a week or so, similar to what we do when we order Amex Gift Cards). But these sorts of protections would put an end to the fraud. 99% of the stolen credit cards are reported within a week. Stores/Cops can easily track which gift cards were purchased and deactivate them before the thieves can drain them fully.

Maybe someone on this forum has some connections to the the gift card processors. Lets get them to act SOON!
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Old Dec 18, 14, 8:42 pm
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Come again?
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Old Dec 18, 14, 8:46 pm
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Originally Posted by hokiegl View Post
But these sorts of protections would put an end to the fraud. 99% of the stolen credit cards are reported within a week
stolen credit cards are just one problem
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Old Dec 18, 14, 8:50 pm
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Originally Posted by Alcibiades View Post
stolen credit cards are just one problem
what the other problem? If a credit card belongs to the "crook", then that's an issues between the person and the CC company. The store would not be on the hook. Its only when the card is stolen that they loose money.
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Old Dec 18, 14, 9:10 pm
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Originally Posted by hokiegl View Post
Lets open up the forum for some suggestions. I feel like the people behind the Gift Cards are idiots, since there are so many different things they can do to deter the illegal activity.
Originally Posted by hokiegl View Post
Maybe someone on this forum has some connections to the the gift card processors. Lets get them to act SOON!
The chances that these multi-billion dollar corporations are idiots when it comes to fraud is laughable.

But the idea that a bunch of people on a message board could put a stop to gift card fraud is just pathetic. Your greed and sense of entitlement have destroyed what little rational thought you may have had.
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Old Dec 18, 14, 10:37 pm
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The problem has to start with the source. If you're really a seasoned MS'er, then you realize that there is not a ton of variation in the GC numbers, nor with the expiration dates. Combine that with sites that allow you to purchase without CVV (and I'm not listing them), it is possible to brute force combinations.
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Old Dec 18, 14, 11:07 pm
  #7  
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I guess I am the only one...

Damn, I wish I lived in a different city. Because where I live, all the store managers tell me that they are stopping selling GCs because of stolen CCs. I guess you guys have different experiences. I know that if there was minimal stolen CCs in my city, then I would be able to MS without issues.
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Old Dec 18, 14, 11:12 pm
  #8  
 
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Thanks for bringing up this topic. I actually think it's something worth discussing. A lot of people on here think MS is ruined by "noobs", but like you said, it's more likely because of fraud. And like you, when I ask managers why they change their CC policy, it's always because of CC fraud.

I don't really have any ideas of my own, but I like your idea of having a wait time before draining. Maybe also requiring people to activate cards online or by phone before using them.

I don't think the GC companies will change though. Their goal is to maximize profit, not prevent fraud. And the retailers aren't going to implement anything new, because it would mean a lot of time and energy training their employees.

Last edited by vinhboy; Dec 18, 14 at 11:18 pm
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Old Dec 19, 14, 12:14 am
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Originally Posted by vinhboy View Post
And like you, when I ask managers why they change their CC policy, it's always because of CC fraud..
That is what THEY tell you. However, most of the big retail corporations have not yet implemented any comprehensive policies against such sales. It seems the little store managers have way too much leeway in deciding what is good or bad which further increases their already overblown self-esteem.
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Old Dec 19, 14, 1:43 am
  #10  
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  1. Require EMV and PIN.
  2. Implement ID and cardholder verification network.
  3. Implement multi-factor authentication.
  4. Require purchase authorization from verified cardholder.

Last edited by XP1; Dec 19, 14 at 6:43 am
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Old Dec 19, 14, 7:45 am
  #11  
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Originally Posted by hokiegl View Post
90% of all our MS is from gift cards. I'm sure I am not the only one who is feeling the noose tighten as stores stop selling them for credit. Its getting harder and harder. I think that in 6 months most stores in my region will not allow me to purchase. Even if they do, not at my current volume.

We also know that none of these restrictions are due to MS. Its all a response to fraud. So how do we stop this?

Lets open up the forum for some suggestions. I feel like the people behind the Gift Cards are idiots, since there are so many different things they can do to deter the illegal activity.

For example, the following could be done behind the scenes without affecting the POS systems at stores:

1. Put a 7-10 day hold on all gift cards over $50 after purchase.
2. Install velocity limits on draining the cards. Maybe increment by 10% of the balance each day until the 10th day.

Such methods would still allow us to MS ( We would just have to let the cards sit for a week or so, similar to what we do when we order Amex Gift Cards). But these sorts of protections would put an end to the fraud. 99% of the stolen credit cards are reported within a week. Stores/Cops can easily track which gift cards were purchased and deactivate them before the thieves can drain them fully.

Maybe someone on this forum has some connections to the the gift card processors. Lets get them to act SOON!
Maybe it would help if visa/mc/amex gift cards were always kept behind the counter or in a locked case? Simon mall cards are kept behind the counter and I've never heard a report of those being tampered.
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Old Dec 19, 14, 8:04 am
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Idea: limit in-store U.S. sales of large denomination GCs to only U.S. citizens with photo ID. That won't stop all fraud, but it will cut down on a lot of it (according to police reports those investigated/arrested are many times non-U.S. citizens).
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Old Dec 19, 14, 12:50 pm
  #13  
 
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Originally Posted by Alcibiades View Post
stolen credit cards are just one problem
A local Safeway, formerly a reliable source for MS, recently implemented a cash-only policy for purchase of VGC's. I asked one of the managers what the reason was - his take on this was that someone had come to the store to purchase VGC's, and that person had been contacted by a scammer via telephone, telling them that the IRS was going to come to their house and arrest them if they didn't provide a credit card number or debit card number. That story was corroborated a few days later when our sheriff's department weekly news column mentioned what had happened.

I didn't argue with the manager- who knows me as a frequent customer (groceries as well as VGC's!) - but apparently he was focused on the ease of using a credit card to purchase a VGC. But that's only a minor part of the social engineering problem. Customer could have purchased one with cash, too (that particular Safeway is a hundred yards from my bank, for example, so if I needed to provide an "IRS" official with a gift card number, I'd just have to make a stop at my bank first to withdraw cash).

I'm guessing that the store manager is congratulating himself on stopping the fraud problem, when he really hasn't done much at all except inconvenience VGC purchasers - at least in the larger amounts.

Incidentally, after reading about this "IRS" scam for at least a year or two, I was "pleased" to be called twice in one week by people who identified as "collectors" for the IRS. Their English wasn't very good - first tip-off! - so I laughed at them and just hung up. When I was younger I would have "played" with them on the phone, but after decades of this garbage I've lost interest in that game.

There's another aspect of VGC purchases I've wondered about. Does the store make a profit on these cards? Or are they just carrying them as a convenience item for their customers? I don't purchase enough salad, fried chicken, and bread to make up for the 2% - 3% the store has to pay on my credit card charge, if I also purchase, say, $1500 worth of VGCs.

Maybe it's not just fraud considerations here, but the stores are actually losing money when we purchase VGC's with credit cards? So they're looking for reasons to shut MS down?

I
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Old Dec 19, 14, 7:20 pm
  #14  
 
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Hope stories like this don't make MS more difficult: http://www.washingtonpost.com/local/...98e_story.html

Asking for ID is reasonable and easily done.
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Old Dec 19, 14, 7:27 pm
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So, you pretty much want the system upended for your own personal gain?
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