Card Fraud Spike Alters Grocery Store Gift Card Policy

A Washington, D.C.-area grocery story chain is only allowing customers to purchase reloadable or prepaid gift cards with cash or bank PIN-based debit due to a significant increase in credit card fraud.

Brian Krebs reported the change to grocer Giant Food’s policy yesterday (April 20) on his cybersecurity blog Krebs on Security.

Giant Food provided a statement about the change, which went into effect last month, stating:

“Giant has recently made a change in procedures for purchasing gift cards because of a large increase of fraudulent gift card purchasing. Giant will now accept only a bank PIN-based debit card or cash for all Visa, MasterCard and American Express gift cards, as well as reloadable and prepaid gift cards. This change has been made in order to mitigate potential fraud risk.”

Giant is just the latest retailer making it harder for consumers to purchase gift cards with the intent to fight growing fraud.

Last month, The Wall Street Journal reported that some merchants have started requiring cash-only purchases of the cards; others have cut them down to smaller denominations; others have put limits on buying multiple cards; and some have just dispensed with selling them altogether.

The reason? Because new credit card rules have put them on the hook for fraud.

“Gift cards are a challenge,” Mallory Duncan, general counsel at the National Retail Federation, told WSJ.

Criminals really love gift cards and love to buy them up with stolen credit cards. In the past, retailers would deal with that because they weren’t on the hook for that kind of fraud. However, with the new EMV rules, they now are, unless they’ve already upgraded their POS to EMV.

Grocery stores, small businesses and gas stations in general have been slow on the EMV front, though gas stations do have additional time. This has made them more vulnerable to gift card fraud.