According to a March 2007 press release by the Florida State Police, "Gainesville WAL-MART stores notified the GPD of a gift card scheme being conducted at their stores. Several suspects were identified as using stolen credit cards to purchase large quantities of gift cards. Subsequent investigation revealed these suspects and others had been traveling throughout Florida purchasing large quantities of gift cards with stolen credit card accounts and then redeeming the cards at WAL-MART Stores and Sam’s Clubs. Items purchased included computers, gaming devices and big screen televisions. Losses experienced by WAL-MART and the banks issuing the credit cards currently total more than $8 million in Florida and are still being calculated."
This is somewhat ironic, given the move from paper based coupon loyalty to programs to electronic gift cards was motivated by security and fraud concerns. Interesting that the suspects first stole credit card accounts, and rather than using them to purchase items, they immediately purchased gift cards. I am surprised that they didn't try to auction off the cards on eBay instead of buying retail.
What we are going to find is that the introduction of gift cards, primarily designed to appease men shopping at Christmas, has introduced a whole new dimension of fraud.
Skimming fraud is going to expand, while technical solutions will be offered up -largely as a pancea. The possibility of large scale fraud is an important factor to consider when introducing any stored value card.
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