industry focus
Is There a Solution On Or Off The Cards to Thwart Gift Card Scammers?
It was once thought that the phrase “never look a gift horse in the mouth” originated from the myth of the Trojan Horse which was left as a surrender peace offering or gift to the citizens of Troy by the retreating and seemingly defeated Greek army around the 8th century BC.
In reality, the giant hollowed-out wooden offering, which was gratefully accepted and wheeled into Troy, contained Greek soldiers who emerged under the cover of darkness to open the gates and allow their comrades in to sack the city. The reality is more prosaic. The idiom actually refers to the good manners of never checking the teeth of a horse that has been given to you, a practice that is seen as impolite as it was a gift in the first place.
Taking a more modern-day analogy, it could be argued that sneering at a birthday gift card as an unimaginative offering from someone who can’t be bothered to buy a present is equally frowned upon as disrespectful and lacking suitable levels of gratitude.
Moreover, rather than “never look a gift horse in the mouth”, it certainly would also be wise today to take a closer look at these gift cards as—rather like the Trojan Horse—they may not be what they seem. To their original meaning, checking that it won’t actually turn round and bite you may seem like sound advice. And, to its misplaced Trojan reference, although the card may not be carrying a lethal cargo, it certainly could be harbouring a rather nasty surprise when the recipient goes to redeem it in-store or online.
This is because it may have been tampered with by global gift card fraudsters who, through a series of elaborate scams, have effectively drained the gift of the cash value put on it by the person buying it. Looking more closely at a gift card could therefore help flag an issue which has cost global retailers billions of dollars. And it’s a fraud gift that continues to give as the problem of “gift card draining” is being cleverly exported across the globe with legions of criminal foot soldiers tampering with them before putting them back in such a way that their paymasters can easily access the funds put on them by the unsuspecting public.
Gift Card Fraud Webinar
Gift card draining was one of the key focus points at a retailer webinar in April hosted by ORIS Media, the publishers of Loss Prevention Magazine Europe and sponsored by FraudBloQR, a brand new solution looking to fundamentally change the rules of engagement around gift card purchase in order to disrupt and disarm the ability to carry out global gift card draining at source.
The webinar—entitled Inside the Global Gift Card Fraud Network—took a wider view of how gift cards are being used as a currency for wholesale fraud, including money laundering.
The webinar attracted more than fifty retailers and provided delegates with an understanding of the historic and economic context of why gift cards have emerged as the currency of choice for fraudsters.
Expert speakers from the worlds of academia, crime management and data security set the scene for the two-hour session designed to help retailers navigate the global and domestic reality of gift card abuse as well as understand the sector’s response to meet the challenge.
Introduced and facilitated by ORIS Media, the webinar was opened with a presentation from Professor Mark Button, a leading criminologist from the University of Portsmouth and the co-director of the Centre for Cyber and Economic Crime.
In his session which explored the growing trend in gift card money laundering, Professor Button said that 50 per cent of all crime today was fraud related. He explored the different types of fraud involving gift card abuse and why this seemingly innocuous piece of card was fuelling criminal enterprises across multiple sectors.
He said gift cards had become a major part of the fraudster’s money laundering armoury due to the tightening of banking regulations around ten years ago where additional target-hardening verification checks were put in place.
According to figures from PayUK, the organisation which runs the retail payment operations including the BACS system, these rules accounted for a 40 per cent reduction in fraud.
Banks are also already more stringent in their checks on fraud because of rules around contingent reimbursement, which mean they must now pay back customers who fell victim to scammers up to a limit of £80,000. New methods for cleaning “dirty” money or the proceeds of crime were therefore required.
Gift cards became and remain an alternative go-to for money laundering because they are anonymous, easy to liquidate, portable, and function essentially like cash without being tied to a bank account.
In the US in 2024, gift cards accounted for 25 per cent of all fraud complaints filed, according to the Federal Trade Commission. Overall that year gift card fraud accounted for over 250 million dollars’ worth of loss.
Professor Button said he had conducted research in conjunction with Cifas, the UK’s fraud prevention organisation which revealed the audacity of growth of online forums promoting Fraud as a Service (FaaS).
The research highlighted that gift card abuse was being perpetrated by both opportunists and organised crime groups and included the rise of large online fraud communities using platforms such as Telegram and WeChat with overt messages to subscribers on how to pay small amounts for loaded high-profile branded gift cards with much bigger values.
Public awareness campaigns were forming part of the deterrent strategy, but the retail sector and law enforcement remained behind the curve. Tougher legal sanctions and prosecutions were needed to disrupt the market.
NRCA—Gift Card Draining
John Hallam and Ryan Shaw of the National Retail Crime Alliance (NRCA) then discussed the collaborative and co-ordinated approach as well as the law enforcement response to international gift card draining and digital wallet fraud.
Gift card draining—often referred to as the “billion-dollar industry”—is a criminal enterprise predominantly executed by organised gangs and international criminal networks. These groups—often referred to as “grinchers”—send individuals into retail stores to steal, tamper with, and replace gift cards with fake or resealed ones, allowing them to steal funds once the card is purchased and loaded.
Popular cards for retailers such as Apple, Target, Amazon, and Google are frequently targeted as are any popular brands where it is easy to spend large sums on a variety of goods.
Global Costs and Impact
The problem has been known about for some years, and its scale internationally is growing with estimates suggesting the true loss figure lies between $5.5 billion to $27.5 billion in fraudulent gift card activity annually.
As early as 2022 the US Federal Trade commission (FTC) received nearly fifty-thousand reports of gift card fraud, totalling over $250 million in losses. Some reports indicate that scammers may have stolen over $1 billion in fraudulent redemptions up until the end of 2025.
In the UK reports of gift card fraud increased by roughly 25 per cent over the past two years, with 9,386 reports of fraud and over £18.5m lost. It is now getting worse across Europe as the US law enforcement close down these organised crime syndicates.
In Canada the Retail Council of Canada reported that nearly $6 million (CAD) worth of gift cards were empty in 2024 due to tampering. In 2023, reports in Canada resulted in an average loss of roughly $2,900 per victim.
The NRCA presentation referred to Operation Yemen, a targeted UK law enforcement action by Norfolk Police against a major scammer who defrauded victims of over £1 million via gift card tampering.
Those involved often use specialised and sophisticated tools to remove the protective backings of cards and reseal packaging to make kit appear untouched when they are returned to the rack.
They then simply “wait and drain”. Automated bots are used by gangs to monitor the card’s balance. As soon as the card is activated at checkout, the criminals steal the funds online. Although they take the value immediately, they know they are safe in the knowledge that the card—a gift for future use—may not be used for some time, at which point there is little to no risk of being caught.
Operation Yemen’s main fraudster’s activities which involved acting alongside alleged Chinese gang elements were brought to the attention of law enforcement through the collaborative work of NRCA working with the Gift Card & Voucher Association (GCVA) from the beginning of January 2025.
“Partnership working with the GCVA and the US Department for Homeland Security provided in-depth knowledge of Project Red Hook, a US multi-agency operation that investigated over five hundred Chinese nationals involved in continent-wide gift card draining and digital wallet fraud conspiracy,” said Ryan.
“Through partnership working with retailers and from learnings provided by Homeland Security, the NRCA was able to identify two addresses linked to this international criminal organisation. It was identified that the offenders were purchasing goods online, using the gift cards and having them shipped to those addresses which were acting as warehouse storage prior to them being shipped internationally.”
Junkai Liu, 26, who was caught with almost seven-and-a-half-thousand stolen Apple gift cards with values of up to £250 each following visits to Morrisons in Dereham and Tesco in Thetford, was jailed for two years and eight months for his part in the scam.
A total of 84 offenders have been identified by NRCA as being involved in gift card draining and digital wallet fraud. A total of £520,351 worth of fraud has been linked to the individuals.
The sophistication involved was multi-layered with gang members taking on specific roles in the criminal eco-system or supply chain. These roles were “takers”, “tamperers”, “replacers”, “balance checkers”, “redeemers”, and “exporters”.
“The consequence of gift card draining is significant to both the consumer and the businesses,” Ryan told the webinar attendees.
He said that apart from the obvious financial loss, there was the spectre of increased customer service costs and consequential reputational damage.
In another case study the NRCA intelligence led to the successful arrest of another gift card tamperer who was arrested at a supermarket in the West Midlands. Around £10,000 worth of fraud was linked to him and the evidence trail led to his address where a number of items were recovered. These included twenty transaction receipts for Apple gift card purchases on different stolen cards, more than forty tampered gift cards, multiple mobile phones, SIM cards, and notebooks listing target sites and the numbers of cards taken per location.
The NRCA also outlined ways retailers can identify gift card draining in real time including looking for individuals removing or replacing large numbers of cards.
Other protections for retailers and consumers include regular card inspections and avoiding cards with compromised packaging, such as torn paper or scratched-off silver foil covering the PIN.
Consumers can also check the number on the card to ensure it matches the number on the receipt. They can also shop smarter by buying cards from behind the counter, in security-sealed packaging, or directly from the company online. Finally, it is advised that the recipient uses the card immediately or as soon as possible.
GCVA
Warren Humphries of the Gift Card & Voucher Association told the webinar attendees that the GCVA set up a sub-group eighteen months ago to monitor and combat the crime. The Association had also worked with European partners at a convened summit in Amsterdam looking at best practice around tackling the issue. This looked at standards, processes and better training for staff to identify fraud. The GCVA has also published guidance on its member website.
It was also providing members with an information pack of guidance on dealing with the press on the industry’s response to gift card draining which included helpful statements which focused upon not blaming the victims of the crime.
“We still have a lot to do,” he told delegates.
“It’s about doing the right thing by customers—we don’t want any customers to have a bad experience, so it is up to the retailers to sort it out.”
“Gift cards can’t and should not be put under lock and key or behind counters,” he argued.
The GCVA view was first heard in the wake of a campaign by an MP who was the victim of gift card fraud last year.
Labour MP for York Outer Luke Charters was given a £75 gift card which was bought in Leeds and used by scammers in Manchester twenty minutes later.
He has been speaking to retailers since the incident in November 2025 and believes they should put in better monitoring behind the scenes to pick up suspicious activity, and to train staff better to help victims.
He also wants retailers whose cards are getting targeted a lot to think about putting them behind the counter.
“Gift card fraud is on the up,” he said.
“It looks as though there’s a degree of organised criminal activity here, so we’ve got to recognise who we’re up against.”
“We need to make sure the sector is out-innovating the criminals behind all this.”
However, Hannah Shimko, the managing director of the Gift Card & Voucher Association, said the problem cannot be fixed “simply by changing how cards are displayed”.
She said putting them behind the counter would add “unnecessary friction” and could lead to a 30 per cent drop in sales, based on industry experience.
That is because for most shoppers they are an impulse purchase.
She added other solutions like improved packaging, security in stores and monitoring were the “most effective ways to tackle this crime”.
FraudBloQR
The final part of the webinar was dedicated to a new solution to the issue of gift card Fraud which prevents draining completely by removing the data from the card so that it provides an activation via a Holographic QR code from the customer’s smart phone.
Stu Butler and Graham Lycett of FraudBloQR, head up a new secure “front end” to the purchase of gift cards which they wanted to share with retailers with a view to establishing a proof of concept.
Both men who collectively share more than fifty years in the gift card and “finTech” payment industries have worked together to develop a business solution to tackle the challenges of gift card abuse at source.
“I’ve been in the gift card industry since 2008 with American Express and Western Union in the US and across Europe,” said Stu.
Speaking ahead of the webinar, he said: “We’ve both seen fraud, it’s a significant issue across the US to the point that it’s now been regulated that retailers must protect their customers’ money, and since this came into effect there have already been two high profile cases with Walmart and Target where a customer buying a gift card that had been drained, successfully won tens of thousands of dollars in damages.”
“Consequently, US consumer confidence in gift cards is at an all-time low. The industry first responded by trying to improve their tamper-proof packs, however these are now referred to as tamper-evident, acknowledging that the organised crime perpetrators have developed a series of strategies to extract the data from the cards, return them to rack and continue to extract the value.”
Graham, the founder and CEO of Enviricard who has also been in this space for 20+ years focusing on the evolution from plastic and PVC to pure paperboard environmentally friendly products, which now represent 90 per cent of all the European gift card market, told the webinar delegates:
“Gift card fraud is highlighted in the media regularly—this impacts consumer trust and leads to a decline in sales.”
“Some brands experience fraud more than others and in some cases reputational damage can cost more with between a one and five per cent reduction in sales making a big difference to the bottom line.”
“To stop fraud, the answer is simple—there must be no data on the card—it is the most logical solution to what has become a complex problem. No redemption data on card stops bad actors from draining or cloning cards.”
“FraudBloQR pairs gift cards with unique, unclonable holographic 3D QR codes or RFID technology, allowing the removal of activation and redemption variable data from the card.”
“It is built by cryptologists using bank grade encryption and advanced security protocols.”
He said the technology only comes alive as a useable gift card through a customer-friendly mobile web interface which delivers information only when needed for secure activation and redemption at the point of sale.”
Stu added: “Because there’s no data on the card to access, only proof of possession of the card with the holographic QR label or RFID, neither of which can be replicated, will mean we release the valuable data only at the appropriate part of the customer experience. We also get real-time geolocation scans for customer or law enforcement insight.”
“The new 3DQR code or RFID choices are also cheaper than tamper-evident packs and prevent fraud. There is no personalised data on the cards, on the racks.”
“We have a series of pilots planned over the coming months and we’re asking for retailers to join and test this approach.”
“FraudBloQR kills fraud from drainage, which is the number one organised fraud segment, but it also provides control and analytics for retailers and fraud loss prevention teams to see exactly what is happening, to either block activity or track it in real-time to catch the perpetrators,” he added.
History and experience tell us that looking a gift horse in the mouth is to be commended. It may once have been regarded as bad manners, but making sure your gift is and does exactly what it’s supposed to do can save a lot of anxiety cost and reputation. Honesty and the integrity of a well-loved transferrable consumable could once again be on the cards.
Now, as a result of the popular webinar, FraudBloQR has offered a free, no obligation consultation to any LP partners to help engage and protect their gift card activities.
