Dealing with gift card theft during the holidays
December 15, 2014

The holiday season brings out a lot of people who purchase gifts for their loved ones. Many people are taking the convenient route with gift cards. These cards are expected to be the most popular item for the eighth year in a row in 2014, according to the National Retail Foundation. However, as a consequence, that makes them a far riper target for theft. Retailers that use gift cards should be prepared to manage any risks that should arise from thieves looking to make a quick buck from stealing and using gift cards. Doing so also increases security in the store space, which can help instill trust in consumers.

A clever steal
The problem with gift cards is that they can be a security nightmare because the ultimate result can be untraceable. As PYMNTS points out, when a gift card gets stolen, it can take a long time to go from the actual theft to a consumer or store discovering it stolen, to determining which one was actually stolen before it can finally be deactivated and unusable. That gives a criminal a lot of time to plan out and purchase something valuable that can be sold for a profit on eBay or a flea market. What's worse for consumers and retailers is that unlike credit or debit cards, there's no way to reimburse the value lost on the card.

That's why retailers have to show vigilance to ensure that thefts aren't a problem. What makes theft tricky, as Entrepreneur Magazine notes, is that the usual gift card thief isn't a casual shoplifter, but rather professional criminals or unscrupulous employees and sometimes a combination of both. How a store handles these two types is rather important. A critical security measure is to have the gift cards within plain sight of a store register so that clerks can spot thieves either tampering with or flat-out stealing the cards. Checking for excessive queries on non-activated cards can address this as well.

In addition, stores should deter "boosters" from returning stolen merchandise for gift cards, which they can then fence or use to purchase something worth fencing. A solid return policy is a good method of completing this.

Of course, there's the matter of handling inside jobs, particularly of savvy employees who subvert policy to sell off gift cards for a profit. For example, if customers complain of cards with zero balance, a store should change its gift card process so that cards aren't activated until the transaction is complete. Integrated payment systems can do this easily.

Nexus: G-WEBCD5