The deposit limit on “closed” cards (eg, my Starbucks card) make them less attractive for organized-crime groups who, according the Mounties again, prefer “open” (ie, Visa and MasterCard-branded) cards with higher limits. These are now accepted as valid currency between criminals who settle drug deals in gift cards instead of cash.. Instead of a suitcase of cash, operatives might show up for a drug deal with a fistful of gift cards. Is this a realistic threat? Who knows, but the Mounties also note that the cards are useful for transferring money across the U.S. border, because they don’t qualify as “monetary instruments” and aren’t subject to reporting limits (people who cross the border with $10,000 or more must file a report with Canadian border authorities).
In addition to supporting criminal value chains, gift cards also stimulate their own kinds of crime. The U.S. National Retail Federation (which estimated Americans will spent $24.8 billion U.S. on gift cards over the holidays) carried out a survey of 75 retailers that track gift card theft and found that they averaged almost $72,000 a year in losses due to gift card fraud. The loss is higher among the 60 percent of retailers polled who have re-loadable cards. Absolutely predictably, and in line with all of our experiences carrying out risk analysis for new e-payment schemes, almost two-thirds of the losses are due to dishonest employees with the remainder split between counterfeit and stolen cards. Gift cards don’t rob people, people rob people.
My opinions are my own (I think) and are presented solely in my capacity as an interested member of the general public. [posted with ecto]