The Conversation - The hidden life of gift cards

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Who hasn’t used a gift card?

They look so innocuous hanging on a store rack, but the colorful brand logos and catchy slogans mask an unseemly underside.

Despite sometimes sporting the emblems of credit card companies, all of the gift cards hanging on those store racks lack the protections of bank cards.

An investigation by The Conversation found that gift cards are so lightly regulated that money flowing through them can’t always be traced. Fraudsters have taken notice.

The cash-like gift cards are increasingly used in many types of underhanded schemes, including impersonation scams like the one our story follows. It starts when Mae, a no-nonsense retired nurse, clicks a message on her computer screen the day before Thanksgiving.

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Kim Patch

Investigations Project Manager

Banking regulations haven’t caught up with gift cards, which fraudsters are using to steal money from people in ways that are difficult to trace or reverse. The Conversation

Gift card scams generate billions for fraudsters and industry as regulators fail to protect consumers − and how one 83-year-old fell into the ‘fear bubble’

Dr. David P. Weber, Salisbury University; Jake Bernstein, The Conversation

Consumers lose more than $5 billion a year to fraud involving gift cards, while the industry exploits regulatory loopholes and delays solutions.

Related: Why gift cards fall into a gap in the 2-tier banking regulation system − and a brief history of why that gap exists

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