Epidemic of gift card fraud

This is the period of online shopping and business is booming. Gift cards are not only an easy and convenient way to get a little something special for family and friends but they allow clients to enjoy discounts while avoiding jostling in the crowd during the holiday season .

As criminals are more and more savvy, new flaws are being implemented and electronic gift cards are used to commit fraud and money laundering. Gift card fraud is widespread online, mainly between Black Friday and Christmas. In 2015, 9.5% of all online fraud attempts involved downloadable electronic gift cards.

The gift card industry is expected to reach $ 160 billion by 2018. On-line purchases grew by 21% ($ 3.34 billion) for the most recent Black Friday. The mass of sales leads traders to lose sales and to disappoint customers when they are not well prepared to handle the volume of orders.

Gift card fraud is also part of the global problem of money laundering. In Canada, the authorities believe that organized crime uses the legal gaps associated with gift cards, including anonymity, to launder between $ 5 billion and $ 55 billion a year. Unlike Canadian banks and financial institutions that have a legal obligation to disclose transactions greater than $ 10,000 to FINTRAC, gift cards are not considered to be monetary tools and do not give rise to a declaration of identity, even across borders.

The logic should lead to expand the use of RegTech solutions to the retail and e-commerce sector. Financial institutions use these banking tools on a daily basis to meet compliance obligations and eliminate bad players.

Merchants and retailers who integrate electronic identity verification tools are able to verify the identity of the cardholder and verify it online. This measure should also protect the trader from risks and lead him to cancel the order if there is any doubt about the transaction. See also https://letstalkpayments.com/

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