Gift cards have become the go-to choice of individuals when shopping for that hard-to-buy-for friend or family member. Just about every major retailer deals with them and now some of the major credit card companies are diving into the fray, including Visa. These cards are advertised as a fun and convenient way to give the perfect gift even when one doesn't know what to get.
For merchants, these gift cards are usually a great benefit since the consumer pays for the card upfront and thus, the merchant knows that future sales will be within their store; these gift cards usually cannot be used in another store, except for the Visa gift cards and similar plans. Merchants then have locked up sales in the future. Along with time limits and other restrictions, merchants come out ahead on these deals.
Now, however, merchants are finding out about fraud with gift cards the hard way. While hacking into computer databases that control and monitor balances and other information are still relatively rare, there are new and innovative ways in which criminals are making these gift cards a liability for merchants.
When an individual receives a gift card, they have a specific ID assigned to that particular card, but they aren't required to enter personal information. This makes it difficult to monitor whether the individual using the card is the rightful owner. But the trend that is beginning to sink its teeth into merchants' sides is the way in which thieves grab an entire stack of gift cards and scan them into small, portable devices that read the card's BIN number as well as its specific ID number. They then have enough information to call up the monitoring station and wait until a consumer purchases the card and fills it with funds. Sometimes these funds can be in excess of $500.
When a consumer then tries to use the card only to learn that the account has been emptied, they are left as a victim and as the major retailers are slow to do anything about it, are becoming disgruntled and angry, feeling that the store has let them down, or worse.
BIN database, while very effective in helping to stem the rampant spread of fraud among prepaid cards and credit or debit cards, is only effective as far as the merchant selling these gift cards are in gathering pertinent information about the consumers who purchase them, including, but not limited to zip codes of the intended purchaser.
BIN checks and other forms of keeping track of who is using these cards can be a great and lasting deterrent to fight the growing spread of fraud and theft among gift cards, but they are only going to work when merchants take the extra step to ensure their customers' security in the purchase.
Merchants who accept general gift cards, such as Visa Gift Cards, are empowered to some degree when they use BIN database in that they can usually be able to verify if the purchaser is the rightful owner of the card. It all takes small steps to build a safer shopping experience and this is one of those steps.
