/ , Small Business / The Ugly Truth About Plastic Gift Cards You Need to Know

The Ugly Truth About Plastic Gift Cards You Need to Know

Is it time to say goodbye to plastic gift cards in favour of digital, for good? Stories like this one recently published in the Ottawa Citizen point to yes. The article tells the story of one Ottawa-based woman experiencing the all too frequent tale of fraud in the plastic gift card industry. Without giving it a second thought, she purchased a few $50 Canadian Tire gift cards from a convenience store as Christmas gifts. Then, when the recipients went to spend the gift cards, they found no funds on them. No, she did not forget to load the cards. It’s called gift card fraud, and it’s happening more often than ever before.

The perpetrators scratch the activation codes off the back of cards, writing down them down, and covering them back up. They then return to the store and put the cards back on the shelf for unsuspecting customers to purchase. Consumers then load the cards and the scammer is able to spend the contents of the card remotely.

Why Plastic Gift Cards Are Becoming the Scam of Choice

The reason why plastic gift cards are the scam of choice for many fraudsters is because they are difficult to trace. There are many scenarios at play for plastic gift card scammers. Plus, scammers are getting craftier everyday.

Best Buy and AARP are joining forces to warn about a growing scam: imposters posing as a loved one, or even the IRS, and demanding gift cards be used for services rendered. The Federal Trade Commission said the number of these reported scams has jumped 270 percent over the last three years. For the full story, watch the report by CBS below:

Increasing Evidence of Plastic Gift Card Fraud in Canada

Another story out of Parry Sound, Ontario shows that Canadians are at risk as well. Luckily, in this instance, an intervention by the OPP thwarted the Canadian Revenue Agency scam. The assailant told the would-be victim that he owed $6,000 to CRA and to purchase Google Play gift cards as payment.

He then went to purchase $750 worth of cards at a local business. Upon trying to purchase more cards at another business an employee notified police of the suspicious activity. Police were able to intervene to prevent the scam.

In another incident, the victim received a call from a man stating he was investigating a bank employee in Parry Sound. The victim was instructed to purchase $2,000 in Google Play gift cards and would receive a $500 reward for assisting with the investigation.

Unfortunately, the victim was able to purchase the cards, providing the card information to the scammer, and the incident is still under investigation.

Individual consumers are not the only target either; businesses of any size are also the target of scams like this. It’s important for business owners to protect themselves from opportunities for scam. To learn more, read Why Physical Gift Cards Are No Friend to Small Business.

Why Digital Gift Cards Are a Better Option

Digital gift cards have a number of safety measures that physical plastic gift cards do not.

  • They are traceable
  • They have protected activation codes

When you buy an eGift card online, via platforms like Perkalead, it’s possible to track the journey it takes such as delivery and redemption. Additionally, since purchasing an eGift card requires imputing personal data such as credit card information, the ability to track fraudulent purchases is much easier. Whereas, physical gift cards that are bought with cash at a local convenience store are nearly impossible to track.

The main issue for many gift card scams is having access to the card activation codes. But eGift cards are protected by this. There’s no way for the scammer to see an activation code prior to purchase. Therefore it is nearly impossible to physically “scratch” an activation code, and put it back on the shelf for resale. This is a major relief for those who often buy physical gift cards in-store.

Plus, physical gift cards can go lost, or go unused by recipients. A digital solution eliminates this risk. The ability to access and redeem an eGift card at any time is an attractive solution for givers and recipients. Not to mention plastic waste, which is presenting major issues for our environment (but that’s a blog for another day).

eGift Cards Are Becoming More Popular with Consumers

Plus, market behaviour is changing, and a generation of digital mobile friendly consumers is emerging. The National Gift Card Association reports that 89% of consumers say they have purchased at least one plastic gift card in the last year. However, 71% of those individuals have also purchased one or more eGifts during the same timeframe. Additionally, 55% of consumers report wanting to give or receive digital gift cards for use via mobile app or digital wallet, especially millennials. The interest in digital eGift cards are increasing year-over-year; 55% of consumers are interested in giving, and 67% are interested in receiving a digital gift card.

Additionally, physical gift cards can go lost, or go unused by recipients. A digital solution eliminates this risk. The ability to access and redeem an eGift card at any time is an attractive solution for givers and recipients. Not to mention plastic waste, which is presenting major issues for our environment (but that’s a blog for another day).

For more about why digital gift cards are driving the future of consumer loyalty and rewards read, 8 Reasons Why Digital Gift Cards Are the Future of Consumer Rewards.

2019-02-13T10:28:37-04:00