As owner of a company that offers gift cards as one of its flagship products, I am obligated to question the viability of our product against fraud. However, it is important to distinguish between fraud and security before we get into this discussion. Security involves implementing all the known techniques and available technologies to ensure the system and the card information is secure and inaccessible to the outside world. For example, card numbers are generated using the same algorithms that credit card companies use. This ensures numbers can never be duplicated or replicated. The system is hosted in a PCI compliant environment and is highly resistant from penetration by cyber criminals. Cards can be voided and new ones generated if needed. There are several other standard security measures in place that I won’t mention (for security reasons). On the other hand, unlike credit cards, gift card fraud and theft are much easier to detect and control in gift card systems. For one, gift cards by their very nature of being non-universal don’t provide anywhere near the same incentive to the bad guys as credit cards do. Why go through the trouble and risk of stealing a gift card number when the value is usually between $20- $100. Plus, they are limited to a single retailer’s merchandise and one can always follow the ship-to address in order to locate the bad guy. In addition, a secret recipe of checks and balances have been baked into Commerce Generation’s gift card system to identify and report suspicious activities. In conclusion, I can say with confidence that gift cards will prevail the fraud war with flying colors. Just consider all the security and fraud issues that surround credit cards and yet they continue to be heavily used. I see the same and perhaps greater success for gift cards.

Written on Thursday, March 4th, 2010 at 1:45 PM and is filed under Online Stores. You can follow any responses to this entry through the RSS 2.0 feed.