How Gift Card Scams Target the Unexpected, And What It Means for Banks

As we prepare for the end of the holiday season, scammers continue to exploit consumers by requesting gift cards as a payment method for various types of scams. Javelin Strategy & Research’s latest look at scams involving prepaid cards finds that victim demographic misconceptions (including victim age, income, and education level) are putting specific consumer groups at risk as cybersecurity awareness and fraud prevention education miss the mark. 

The propagation of gift card scams has been fueled by economic pressures, such as inflation and high student debt, that educated, younger technophiles are especially sensitive to. A lack of regulation around the use of gift cards, coupled with the inherent anonymity of prepaid cards, has made gift cards increasingly viable tools for fraud and money laundering. This report reviews how financial institutions can enhance their cybersecurity and fraud awareness campaigns specifically around prepaid scams that increasingly victimize younger adults through social media interactions. 

Key questions discussed in this report:

• Why are younger, educated consumers at the greatest risk of falling for gift card scams?
• How do financial institutions fall short when it comes to preventing and detecting gift card scams? 
• What can financial institutions do to better assist victims of gift card scams? 
   

Companies Mentioned:

Better Business Bureau, Chase Bank, Consumer Financial Protection Bureau (CFPB), Federal Trade Commission (FTC), Financial Crimes Enforcement Network (FinCEN), Information Technology & Innovation Foundation