Fraud remains a significant challenge across the global payments industry, and the retail sector is on the frontlines of combating these criminal activities. Gift cards, a cornerstone of the U.S. economy and the #1 most requested holiday gift for 17 consecutive years, are increasingly being targeted by organized retail crime (ORC) through a tactic known as Gift Card Tampering.
What is Gift Card Tampering? This emerging form of fraud involves criminals accessing sensitive card information, returning tampered cards to shelves, and stealing funds once cards are activated at the point of sale. Gift card tampering is part of the broader ORC epidemic and has ties to international organized crime.
How the Industry is Responding: To address this emerging threat, retailers, brands, distributors, and law enforcement are working together aggressively. Efforts include:
- Enhanced Packaging and Technology Controls: Innovations to deter tampering and prevent access to sensitive card data.
- Advanced Monitoring Systems: Tools to detect and disrupt fraudulent activity in real time.
- Homeland Security Investigations (HSI) Project Red Hook: Launched in December 2023, this nationwide initiative focuses on disrupting organized crime groups abusing gift cards. Project Red Hook centralizes intelligence, coordinates operations, and educates law enforcement on tackling gift card fraud.
HSI and industry partners are also providing critical tools, resources, and contacts to support local and state law enforcement in identifying and prosecuting perpetrators of gift card tampering.
Challenges to Prosecution: Despite ongoing efforts, challenges remain in successfully prosecuting gift card fraud:
Lack of Awareness: Local law enforcement, policymakers, and district attorney offices need further education on the link between gift card fraud, ORC, and transnational criminal organizations.
Legal Gaps: Because gift cards have no value until activated, there is often a lack of clarity on applicable charges when criminals are caught in the act.
A Call to Action for State Legislators: We are urging state legislators to review existing fraud statutes and proposed ORC legislation to ensure consistent and clear pathways for the prosecution of gift card tampering. Enhancing legal language and clarifying charges can provide the necessary tools to hold perpetrators accountable and further disrupt organized retail crime.
Together, We Can Make a Difference: WR looks forward to working collaboratively with legislators and law enforcement to reduce gift card fraud, safeguard consumers, and protect the integrity of the retail economy in Washington State.
