This blog was first published on November 7, 2024, and has been updated for accuracy on September 18, 2025.
From store shelves to checkout lines, gift card fraud has quietly become a major headache for both retailers and consumers. The rise of gift card fraud has grown so drastically that Maryland recently passed the Gift Card Scams Prevention Act of 2024 to help address the rising threat. But what’s fueling the growing trend behind gift card fraud? For scammers, it’s easier now than ever to commit gift card fraud due to two main contributors:
- Global Scale of Gift Cards – Gift card fraud is so rampant because of the sheer number of gift cards in circulation around the world. In 2024, the global gift card market was valued at $1.24 trillion, with projections indicating growth to $2.31 trillion by 2030.
- Ease of Access and Availability – Today, most grocery stores, convenience stores, and big box retailers have displays where gift cards can be purchased for various retail brands, making it easier for scammers to target multiple brands simultaneously.
What is gift card fraud and how does it work
Gift card fraud (also known as gift card scams) takes many forms, but at its core, it involves the unauthorized use of someone else’s gift card—whether voluntarily or by force—to make purchases. Fraudsters may steal card numbers and PINs from cards on display, swap them out with fake or empty cards, or intercept funds after purchase. Ultimately, gift card fraud is a lose-lose for retailers because not only do their reputation and trust with customers take a hit, but they often result in chargebacks and a loss of revenue.
Examples of gift card fraud include:
- Stealing physical gift cards
- Accessing and using a stolen gift card’s account data off the dark web
- Using stolen credit cards to buy gift cards
- Using afterpay methods to buy cards
- Digitally attacking the gift card redemption steps on a retailer’s website
Thieves and organized retail crime (ORC) rings target gift cards because they can be easily manipulated physically or digitally. Sometimes, gift cards are stolen from a physical location to buy items, which are returned or flipped for cash. But increasingly, gift card fraud involves digital bots performing relentless attacks to access gift card numbers from a retailer’s website or continually testing various combinations of gift card numbers to drain the gift card balances.
The arrest of a 28-year-old woman in Washington State in 2024 highlights the scale of devastation that gift card fraud can cause to retailers and their customers. Another instance of gift card fraud included over 100 victims at one soft apparel retailer who lost $100,000 in gift card value. The increase in gift card scams and fraud cases emphasizes the gravity of this issue and the need for increased awareness and prevention measures.
How to spot gift card fraud at checkout
Three warning signs regarding gift card fraud include:
- Scarcity of funds on newly activated cards – If a customer goes to use a new gift card and there is a scarcity of funds available, that is a red flag that the card has been compromised. Thieves most likely copied the code off the gift card, put it back on the rack, and waited until a cashier activated it to drain the funds.
- The customer insists on only using gift cards as payment – When a customer insists on paying only with gift cards, it can be a strong indicator of fraud. Unlike typical shoppers who use gift cards occasionally, fraudsters may rely on them exclusively because they’re harder to trace, lack the same fraud protections as credit cards, and can mask the origins of stolen funds. This unusual behavior often signals that the customer is using your store as a channel to legitimize illicit value rather than making a genuine purchase.
- Damaged or altered packaging – Gift card fraudsters may manipulate the packaging or card to capture numbers before purchase. Signs include damaged or resealed packaging, exposed or altered PINs, or mismatched barcodes and stickers. For retailers, these are not just cosmetic issues, they can be direct indicators of theft-in-progress.
The role of employee training in preventing gift card fraud
For retailers, proactive training is essential to ensuring employees are adept at preventing gift card fraud (or gift card scams). Solutions like Appriss Retail’s Secure™ Coach allow retailers to audit their employees for training compliance and identify associates needing additional supportive training. With Secure Coach, retailers can manage associate knowledge of gift card fraud and enforce customer-facing behaviors to better educate consumers purchasing gift cards or identify scammers who may be trying to pull a fast one with a stolen gift card.
How to prevent gift card fraud using technology
Retailers should leverage data analytics and machine learning in gift card fraud detection to level the playing field against the vulnerabilities that can be exposed during gift card scams.
A retailer’s employees have deep insider knowledge of store procedures, including gift card activation and transaction processes, making them vulnerable to exploitation by fraudsters, or even more likely to commit fraud themselves.
In some cases, employees may collude with external fraudsters, assisting them in committing gift card scams. With Appriss Engage™, retailers are alerted to potential fraudulent behavior, and an automated validation process helps teams review and respond before fraud can occur. The system also reviews employee IDs and transaction data at a macro level to identify unusual behavior and uncover those associates attempting gift card fraud. Additionally, retailers can use data analytics paired with machine learning to recognize the patterns, unusual transactions, and returns associated with gift card fraud.
Data analytics that detect patterns across an entire retail chain are essential tools, as gift card fraud is rarely an isolated incident, and gift card fraud can be linked to organized retail crime (ORC) rings. Beyond detection, retailers can use tools to track and investigate ORC-related incidents. Incident + ORC Intelligence™ can help retailers streamline data collection, improve collaboration, and leverage generative AI to quickly connect related cases. This helps loss prevention teams to not only spot suspicious gift card activity but also uncover and disrupt larger ORC networks that use gift card fraud to generate funds. To strengthen cases, retailers who apprehend gift card scammers should also collaborate with law enforcement to meet the $1,000 threshold required for federal prosecution.
Reporting gift card fraud and seeking help
If you feel like your customers or even you have been the victim of a gift card scam, report it immediately.
- Report it to the gift card issuing company – For retailers, this may be your internal Loss Prevention (LP) or Asset Protection (AP) teams. Provide your LP team with the details related to why you believe this customer is the victim of a gift card scam. If your Loss Prevention or Operations teams are leveraging a solution like Engage, it will be easier to begin piecing together the narrative as to what occurred with the gift card.
- Demand and issue a refund – Once a gift card scam has been verified, ask for your own or your customers’ money to be refunded. This is a good internal topic to discuss, as some brands find that refunding with cash may have been the scammer’s plan all along.
- Report the gift card fraud to the FTC – If you’re a consumer affected by gift card fraud, you can visit ReportFraud.ftc.gov and potentially the Better Business Bureau if the retailer you are working with is hesitant to issue a refund and you want to elevate the issue to a third-party option. To learn more about gift card fraud and gift card scams, watch this short but informative video created by the Federal Trade Commission (FTC).
Gift card fraud remains a costly threat, eroding both retailer profits and customer trust. By understanding fraud tactics, training employees, leveraging advanced tools, and working closely with law enforcement, retailers can reduce exposure and protect their brand. Staying vigilant and proactive creates a safer, more secure experience for all.
For deeper insights—including a real-world gift card laundering scheme case study—download our report, “Return to Sender: How Organized Retail Crime Rings Exploit Returns, Claims, and Loopholes.”
