To counter fraud as the holiday season approaches, Best Buy, Target and Walmart made changes to their gift card programs. The moves were announced by the attorneys general of Pennsylvania and New York, Reuters reported.
They also come amid an initiative to take on fraudsters that has run for a year. “By working collaboratively with these retailers, we’ve created a way for businesses to take proactive steps to prevent scams,” New York State Attorney General Barbara Underwood said in a statement.
With the new policies, changes include lowering the transaction limits on the sale of store-branded gift cards. At the same time, the changes also dictate that store-branded gift cards can’t be redeemed for other gift cards and place a cap on the amount of money that can be added to the cards. The retailers have stepped up their training, too, in an effort to aid workers in identifying scams.
Fraudsters reportedly buy third-party gift cards from brands like Steam, Google Play and iTunes with retail gift cards. They also masquerade as different individuals in an effort to scam other people. In those cases, scammers have reportedly impersonated tax agents looking for payments for purportedly owed taxes or grandchildren needing funds to get out of legal difficulties.
The news comes as a Federal Trade Commission (FTC) report early this year claimed that fraudsters are increasingly requesting to be paid with gift cards. Some scammers are reportedly even requesting specific brands like iTunes and Google Play gift cards, it was reported in October. The FTC examined fraud reported directly to the agency, but it did not include reports in regards to shop-at-home purchases.
But the agency found that from January through September of this year, gift cards and reload cards were reported as a payment method in 26 percent of the fraud reports. That figure rose from only 7 percent in 2015, which marked an increase of 270 percent. Fraudsters like to use these kinds of cards because they allow them to expediently receive cash, as well as remain anonymous, and the transaction is usually irreversible.