How IT Can Minimize Gift Card Fraud

Frank Hayes, senior news columnist at Computerworld, is one of those writers that makes you want to read a magazine from the back to the front. Hayes' column, Frankly Speaking, appears at the very back of each edition and is almost always a "must read."

Last week, Hayes' column, 8 Million Reasons, really struck a chord with me. Sometimes we spend so much time trying to blame somebody for problems, we fail to make the effort to identify ways to solve the problem.

One of the revelations coming from the TJX breach was the arrest of a Florida gang who had used some of the stolen cardholder information to obtain at least $8 million in Wal-Mart gift cards. Hayes' identifies two key areas where IT could have thwarted or at least minimized the gift card scam.

1. After credit cards are reported stolen and have been deactivated, retailers should use the list of stolen card numbers to automatically search its own recent transactions for suspicious activity - such as the sales of gift cards. If they find cards that were purchased with stolen cardholder information, they could deactivate the card and recover some of the money.
2. Even if gift cards purchased fraudulently have been used, those transactions could be flagged so that if the merchandise is brought back for a refund, the transaction should be flagged to be spotted at that point. Again, merchandise is recovered and there is no further cash loss from providing a refund.

Hayes points out that IT has the ability to make this all possible automatically and continuously. The data is there, but the software and database performance isn't.

It's easy to point fingers in a case like TJX. The hard part is to do something about it. Taking steps to blunt the gift card scam is one really positive way to help blunt the value of stolen cardholder data.