What’s an easy way to add a few percentage points of revenue to your P&L over the next few months? eGift cards.
If you’re part of the 19% of online businesses that do NOT offer eGift cards, they offer a great incremental sales opportunity.
- eGift cards are popular with online shoppers—sales of digital gift cards are projected to grow 40% this year.
- We’re about to head into the holiday season, the time of year when 3 out of 4 consumers will buy gift cards—about 2 or 3 cards on average.
If you’re part of the 81% of online businesses that DO offer eGift cards (or one of the 19% taking the advice above), you should make sure you have protections in place to guard against eGift card fraud.
Why? According to a leading payment processor, eGift cards were the biggest targets of fraud attacks between Black Friday and Christmas 2015 (out of all the products sold by their merchants). What’s behind this frightening statistic? In just a few hours, a single fraudster can steal tens of thousands of dollars in eGift cards. Using stolen credit cards, multiple identities, and automated fraud tools—all of which can be procured cheaply and easily on the Dark Web—fraudsters can operate with impunity if you don’t have a strong antifraud system in place.
If you’re thinking “What criminal is really going to steal $10,000 worth of jaw breakers (in the form of eGift cards) from JawBreakers.com?”, think again. Secondary gift card resale marketplaces make it possible for fraudsters to quickly turn eGift cards into cash. With redemption amounts as high as 80 cents on the dollar, turning “virtual jaw breakers” into thousands and thousands of dollars in ill-gotten cash is easy.
Not only will you get hit with fees and fines when the chargebacks eventually roll in, but you’ll also be stuck honoring the eGift cards when they get redeemed by consumers who purchased them on the resale marketplaces. And there’s really no way to avoid this double whammy without risking bad publicity and negative comments on social media.
Unfortunately, outright theft is just one of the problems online businesses need to guard against with eGift cards. Another big risk is card testing, which is up 200% overall this year.
Since eGift cards can be purchased in low denominations without raising suspicion, they make ideal targets for testing stolen credit card accounts. Criminals can test authorization on a $5 eGift card to 1) confirm the stolen account is working and 2) leave as much credit balance as possible for the fraudster to use elsewhere on high-value jewelry, electronics, airfare, etc.
These card testing test transactions can increase your chargeback rate or cause other problems that include the dreaded TC-40 Monster. This is where low-value transactions don’t get reported to you as chargebacks because it’s not worth the cost to your issuing bank. But these TC-40 claims can still negatively impact your merchant account.
Here’s the good news. With an enterprise-class fraud prevention solution like Kount Complete, you get the capabilities you need to prevent eGift card fraud:
- Multiple, advanced fraud screening technologies.
- Real-time data orchestration hub.
- Advanced Artificial Intelligence (AI) & Machine Learning technology.
- Human intelligence with deep fraud fighting expertise.
- Integrated, comprehensive fraud prevention platform that employs multi-layer approach.
Another option for getting industry-leading fraud prevention quickly and easily? Work with a payment service provider like BlueSnap, Braintree, Chase Paymentech, Recurly, etc. that offers portfolio-wide fraud prevention (using Kount’s antifraud technology) as a baseline service to their merchant accounts.
Make sure you don’t get blind-sided by eGift card fraud. Download the eBook “eGift Card Fraud: The Gift That Keeps On Taking” and find out how you can boost sales with eGift cards while protecting against fraud losses in this increasingly popular channel.