How To Spot And Avoid Gift Card Scams?

27th March, 2023

Author: Janis D’souza, Global Head of Marketing

Category: Prepaid Products

Are you a brand aiming to outshine your competitors and stay ahead in your industry? Launching a gift card program can bring numerous benefits, such as fostering customer loyalty and attracting new customers. However, the prevalence of gift card scams in the market poses a challenge, even though gift cards are recognized as a highly effective means of engaging with your business users.

With the post-pandemic world embracing digital advancements, businesses have increasingly moved online to meet evolving consumer needs. Unfortunately, this shift has provided an opportunity for gift card scammers to target both small and large enterprises.

In this blog post, we delve into the vital question: How can you identify and steer clear of gift card scams? Join us as we explore effective strategies to safeguard yourself and your business.

What is a Gift Card Scam?

Let’s begin with the fundamentals: A gift card scam refers to the fraudulent utilization of an unauthorized gift card for illicit purchases. Unfortunately, these scams have been increasing in frequency over time, causing adverse effects on businesses in various scenarios.

Given the multitude of online payment methods available today, scammers often resort to stealing sensitive information such as credit card details and bank account data to acquire gift cards. Subsequently, these stolen gift cards are used to perpetrate fraudulent activities targeting businesses.

If your website experiences a significant volume of transactions, detecting gift card scams can be challenging. However, fret not! We are here to assist you by providing some essential measures to help you spot and identify gift card scams

How To Identify Gift Card Scams?

Here are ways to spot common gift card scams:

  • Stolen credit card scheme: Scammers exploit stolen credit cards by making online purchases and later returning the stolen items for a refund in the form of a gift card. This leaves the credit card owner responsible for the theft, while the fraudster escapes. When the credit card owner inevitably files a chargeback with their bank, you’re left covering the cost of the fraud.
  • Multiple attempts with gift card codes: If someone repeatedly tries to make purchases using the gift card option on your website, it could indicate a gift card scam. Scammers utilize algorithms to test the balances of random gift card codes, leading them to make numerous payment attempts with different codes.
  • Account takeover strategy: Fraudsters may hijack a legitimate customer’s account with your business to make small gift card purchases. They quickly cash out these gift cards before detection. Once again, the genuine customer files a chargeback, leaving you to bear the burden of the fraud.


By staying vigilant and being aware of these common gift card scam tactics, you can better protect your business and customers.

How To Protect Yourself From a Gift Card Scam?

 Now, it’s not enough to only learn how to detect gift card scams. The real question is: how can you protect yourself from these scams?

  • Implement limitations on the number of gift card purchases for individual business users, as well as a cap on the value of purchases that can be made using gift cards. This effectively prevents gift card scammers from cashing out stolen cards through multiple or high-value transactions.
  • Maintain an up-to-date identification system to verify that a business user returning an item is indeed the same person who made the original purchase, eliminating the possibility of scammers impersonating legitimate customers.
  • Equip your business with robust fraud detection software or a dedicated team to swiftly identify and prevent gift card scams when an unauthorized or fraudulent card is used for a purchase.
  • Establish communication channels with regulatory authorities so that you can promptly report any identified scammers. If you fall victim to a gift card scam, it is crucial to report the incident to the appropriate authorities immediately.
  • Before accepting any gift card payments, always verify the legitimacy and balance of the gift card through a balance check. This verification step should be carried out before validating the gift card purchase.
  • Apply security seals on your business’s gift cards to detect any signs of tampering or fraudulent activity.


Gift card scams not only target businesses but also individual consumers. As a business user, be cautious of enticing gift card deals that appear too good to be true. Such programs often turn out to be scams, and individuals should exercise vigilance when encountering them.

We hope this post assists you in detecting gift card scams and safeguarding your business from fraudsters attempting such attacks! Remember to implement preventive measures within your business to ensure maximum security.

Prepay Nation is a B2B product marketplace specializing in distributing domestic and cross-border transfers of mobile airtime, data, bundles, utility payments, and e-gift cards. We offer a wide range of prepaid solutions that help you enhance user engagement, foster loyalty, and expand your revenue sources. Contact us today to learn more about Prepay Nation’s marketplace!


Janis D’souza,
Global Head of Marketing