Walking in a Gift Card Wonderland

As many of us know, we no longer have to dread figuring exactly the right gift or just what size Aunt Mabel may be wearing.  We have the very popular option of getting that special someone a gift card.  Giving someone a gift card is a bit more personalized than just handing over that crisp $50 bill.  However, to some employees the theft of gift cards can seem to be much easier than dipping their hand in the register to take some of your hard earned cash and a just another way to try to take advantage of the system.

When analyzing your SVC data you may want to look at a few of our favorite reports from the SVC Incident Category:

ü   Merchandise Credit Issued and Redeemed Summary

ü  Multiple SVC Same Transaction

ü  SVC Issued and Redeemed by Same Person

ü   SVC Issued and Redeemed Same Day

The “SVC Issued and Redeemed on the Same Day” report is excellent for highlighting several high risk situations.  For example, we all know that the average shopper will not purchase a SVC card and then turn around and use it the same day.  If you see this happening it could be a situation where the associate selling the gift card keeps the live one and gives the customer a blank.  The “good” card is then used for another sale and the associate keeps the cash.  Also look for situations where the card is purchased on a regular sale and redeemed as an Employee Sale.  This is a great indicator of employee discount fraud. Finally, watch for SVCs that are issued in a regular refund and redeemed on an Employee Sale – especially if the same person uses it.  While it would seem somewhat surprising that an employee would need to get their discount on an item purchased with a stolen gift card, as we all know, dishonest employees are greedy.  Using the “SVC Issued and Redeemed By the Same Person” report will identify situations where the selling associate is the same as the person who redeems the card on an Employee Sale.  There are few situations where this is a legitimate transaction, so hits on this report are a great indicator of theft.



Before I had a 7 yr old daughter that enjoyed taking my old gift cards to use in the many “stores” she creates for us to play with each night, I would often be asked “There is nothing remaining on this card, would you like me to throw it away for you?”  My thought would be, why would I want that card back and have to wonder each time I found it on the bottom of my purse “is there anything on this card?”  However, dishonest employees are hoping for this. The associate will keep SVCs with small balances, telling the customer that they have been used up.  These cards accumulate and then are used on their own transactions later (remember the greedy factor??).  Look at the “Multiple SVC in Same Transaction” report with a sub report for Employee Purchases.  When you see a lot of small value cards being used, there may be a problem!  

The trend of getting a little something special for yourself with the purchase of gift cards has also been on the rise.  However, like most promotions in the retail world, this may be giving your employees a way to reward them self.  Watch for these cards showing up on employee purchases or for an associate who is either issuing or redeeming a card on every transaction.  It could be an integrity issue or a training issue – it is probably something that should be checked out.

External theft and gift card fraud is also a huge area of vulnerability.  Review the “SVC Issued by Tender” report and really focus on large gift card sales that were purchased with a check or a fraudulent credit card.  Many of these fraudsters are putting these cards out to auction so by checking the validity of the purchasing account, you can decommission cards that were purchased with bad credit cards or checks.  Aspect retailers have reported six figure savings by using this process!  Another external fraud issue is the cloning of cards in the stores.  Be sure that stores know to contact Loss Prevention if there is a sudden disappearance of blank gift cards in the store.  That way you can be alert to possible upcoming fraudulent activity.