Gift cards have become a convenient and popular gifting option across Canada, frequently displayed on racks in major retail stores. However, this convenience has made them a lucrative target for scammers, resulting in significant financial losses for consumers and retailers alike. In Canada, it was reported that millions of dollars are lost each year due to gift card fraud, making it a growing concern for authorities and businesses.
A common scam involves tampering with gift card barcodes. Fraudsters replace the legitimate barcode with one linked to their own account. When an unsuspecting consumer purchases the card and loads funds onto it, the money is diverted to the scammer’s account. Another common tactic involves scammers stealing activation codes by scratching off the security coating, recording the information, and resealing the cards. Once the card is activated, they use automated systems to drain the funds.
In addition to physical tampering, scammers have expanded their operations online. Phishing scams are used to trick consumers into providing gift card codes by posing as legitimate businesses, friends, or government officials. Cybercriminals also employ bots to test millions of card number and code combinations on retailer websites until they find valid combinations. Once obtained, these gift card credentials are sold on underground marketplaces or used to purchase items that are then resold for cash.
Scammers have also leveraged social engineering tactics. Consumers are often targeted with fake phone calls or emails claiming they owe money to organizations such as the Canada Revenue Agency (CRA). Victims are pressured to purchase gift cards and provide the codes as payment. These scams are particularly effective during tax season or holidays, exploiting fear and urgency to coerce compliance.
Another emerging trend is the use of gift cards in cryptocurrency laundering. Fraudsters use stolen or tampered gift cards to purchase cryptocurrencies, making it nearly impossible to trace the funds. This method is attractive to organized crime groups, as it allows them to quickly move large amounts of money anonymously.
For retailers, gift card fraud poses significant challenges. Fraudsters use stolen credit card information to purchase gift cards, leaving retailers liable for chargebacks when the credit card companies reverse the transactions. Additionally, scammers exploit return policies by stealing merchandise, returning it without receipts, and requesting store-branded gift cards, which they can then resell.
To combat gift card fraud, Canadian retailers are adopting various measures, including secure packaging and tamper-proof designs for physical cards. Many retailers are also implementing enhanced employee training to identify suspicious purchases, such as bulk gift card purchases, and educating consumers on how to spot tampered cards. Digital security is also being prioritized, with investments in advanced cybersecurity systems to detect and prevent brute force attacks on gift card databases.
Consumers can protect themselves by purchasing gift cards only from reputable sources and inspecting them for signs of tampering. It’s crucial to verify that the card is activated at the time of purchase and to retain receipts as proof of purchase. Online, consumers should avoid clicking on suspicious links or responding to unsolicited requests for gift card codes. Reporting suspicious activities to local law enforcement and the Canadian Anti-Fraud Centre can also help authorities track and combat these scams.
Gift cards have become a valuable commodity on the dark web, where stolen or fraudulently obtained cards are bought and sold in large quantities. Criminals who obtain gift card information through tampering, phishing, or brute force attacks often turn to underground marketplaces to monetize their theft. These marketplaces operate on the dark web, a hidden layer of the internet accessible only via specialized browsers like Tor, which anonymize user activity and make it difficult for law enforcement to track.
On these platforms, stolen gift cards are typically sold at significant discounts, often 50% or more off their face value. Buyers range from opportunistic individuals seeking cheap deals to organized crime groups looking to launder money. In some cases, fraudsters bundle multiple cards or offer "bulk discounts," making it easier for buyers to acquire large amounts of stolen value quickly. Some listings include specific details about the cards, such as the retailer, remaining balance, and even instructions for redeeming them without triggering suspicion.
The dark web has also enabled the proliferation of tools that facilitate gift card fraud. For example, specialized bots designed to test gift card numbers and codes are widely available for purchase on these platforms. Criminals use these bots to automate the process of identifying valid gift card credentials, further fueling the cycle of theft and resale.
BlueSky Risk Intelligence Monitoring leverages advanced open-source intelligence tools to monitor dark web marketplaces and other underground platforms for suspicious activities related to stolen gift cards. By analyzing publicly and commercially available information alongside hard-to-access data from the dark web, BlueSky provides clients with actionable insights to protect their assets and mitigate fraud risks.
BlueSky’s tools are capable of identifying and tracking stolen gift cards listed for sale, including details about the retailers affected and the methods used to compromise the cards. By using artificial intelligence and advanced analytics, BlueSky can detect patterns indicative of large-scale organized retail theft operations. For example, analysts can monitor the frequency and volume of gift card listings from specific retailers, enabling businesses to understand the scope of the threat and take targeted action.
In addition to dark web monitoring, BlueSky offers support for fraud investigators and retail security managers by providing real-time alerts about emerging fraud trends and tactics. These insights can help clients preemptively strengthen their defenses, such as by adjusting fraud detection systems, enhancing cybersecurity measures, or collaborating with law enforcement to disrupt criminal networks.
BlueSky’s intelligence platform also empowers retailers to protect their brand reputations. By identifying and addressing stolen gift cards sold online, businesses can reduce the risk of customer dissatisfaction and financial losses associated with fraudulent redemptions. With BlueSky’s comprehensive approach, clients gain the tools and knowledge necessary to stay ahead of evolving fraud tactics, ensuring the integrity of their gift card programs and safeguarding their customers’ trust.
By combining cutting-edge technology with expert analysis, BlueSky helps clients mitigate the risks of gift card fraud and maintain a secure retail environment. This proactive approach ensures businesses can navigate the challenges posed by dark web activity and organized retail crime with confidence.
While regulations in Canada, such as prohibitions on expiry dates and fees for most gift cards, aim to protect consumers, gift card fraud continues to evolve. It requires vigilance from both consumers and businesses to mitigate the risks. By staying informed and adopting proactive measures, Canadians can safeguard their financial interests and ensure that gift cards remain a convenient and safe gifting option.
At BlueSky, we offer our clients unparalleled access to analyst-verified monitoring, actionable intelligence, and proactive insights into protests and potential disruptions in real-time. Our commitment is to deliver intelligence that is not only insightful but also deeply rooted in human expertise. We pride ourselves on delivering intelligence that is insightful and human-centric, because "Our best intelligence is not artificial."
If you have additional questions about this report or would like more information on BlueSky, reach out to our team directly: BlueSky@paladinrisksolutions.com