In the first few months of 2024 alone, cybercriminal activities have cost Indian citizens over Rs.1,750 crore, underscoring the urgent need for businesses to strengthen their defenses against fraud. As companies embrace the rising popularity of gift cards for customer engagement and brand loyalty, it’s crucial to understand that these assets are not immune to fraud either. With gift cards being particularly susceptible to misuse, implementing robust security measures is essential.
At Razorpay, we’re dedicated to helping businesses like yours safeguard both financial assets and customer trust. Here are ten strategies designed to help protect your gift card offerings from fraud and ensure a secure experience for all.
1. Use Two-Factor Authentication (2FA)
Adding an extra layer of security can go a long way in preventing unauthorized transactions.
- Verification for Transactions: Require 2FA (e.g., SMS or email OTP) for purchasing and redeeming high-value gift cards to prevent unauthorized access.
- Secure Account Access: Encourage customers to create strong passwords and enable 2FA for accessing their accounts.
2. Set Limits on Gift Card Purchases & Redemptions
By controlling the volume and value of transactions, you can reduce the risk of fraudsters making large purchases or redeeming gift cards in large volumes.
- Daily and Per-Transaction Limits: Restrict the number of gift cards a single customer can buy in a day or per transaction.
- Value Caps: Place a maximum limit on the value of each card purchased online.
- Redemption Limits: Set limits on the number of gift card redemptions a user can make in a certain period, flagging any unusual activity.
3. Implement KYC and Customer Verification
Verifying customer identities before high-value transactions is an effective way to deter fraudulent activity.
- Know Your Customer (KYC): For high-value or bulk gift card purchases, request identification details, such as a photo ID.
- Blacklist Suspicious Accounts: Maintain a blacklist of accounts flagged for suspicious activities to prevent future transactions from known fraudsters.
4. Communicate Clear Terms and Conditions
Transparency is key to maintaining customer trust and avoiding misunderstandings.
- Detailed Terms and Conditions: Clearly outline the terms of use, including expiration dates, redemption limits, and refund policies. Visible policies help prevent disputes and reassure customers.
5. Use IP & Device Fingerprinting
Tracking user behaviour helps identify suspicious activity and prevent fraud.
- Monitor IP Addresses: Keep an eye on IP addresses used in gift card purchases and redemptions, particularly from high-risk regions.
6. Set Expiration and Balance Tracking Policies
Expiration dates and real-time balance tracking help mitigate risks of fraud over time.
- Expiration Dates: Introduce expiry dates on gift cards to minimize the potential for misuse over extended periods.
- Balance Tracking: Enable secure balance tracking through your website or app so customers can verify balances, reducing queries and potential fraud.
7. Monitor Account Creation and Usage Velocity
Limiting activity on new or dormant accounts is a common practice in fraud prevention.
- New Account Restrictions: Implement lower spending limits for new accounts until a history of trusted behaviour is established.
- Suspicious Activity Alerts: Watch for sudden, high-value transactions from newly created or previously dormant accounts.
8. Track Repeated Failed Transactions
Repeated transaction failures can signal fraud testing attempts, especially with invalid payment details or declined cards.
- Monitor Failed Attempts: If an account has multiple failed transaction attempts, it may indicate fraud testing. Take action accordingly.
9. Keep Detailed Transaction Documentation
Accurate transaction records are crucial in disputing chargebacks or handling fraud claims.
- Comprehensive Record-Keeping: Maintain records including purchase details, IP address, device used, and payment method. Track when and where the gift card was issued and redeemed.
10. Define Transparent Refund and Replacement Policies
A clear refund policy helps reduce potential conflicts and builds customer trust.
- Refunds for Fraudulent Transactions: If fraud is detected, ensure the card is deactivated, freezing the remaining balance. Provide a refund or replacement only after verifying the fraud claim.
- Replace Stolen Cards: For genuine customers who fall victim to fraud, consider replacing the stolen card or refunding the balance after investigation.
To Sum Up…
By adopting these best practices, you’re not only protecting your business from financial losses but also building a reliable brand image that reassures customers. As always, Razorpay is here to support you in implementing these strategies and maintaining a secure environment for your business and your customers. Safeguard your business, foster trust, and help build a business where security and integrity come first.
