How Walmart is fighting back against gift card scams

The frequency of gift card scams has risen sharply in recent years, but America's biggest retailer has devised a way to prevent thieves from getting away with free money.

So far, it has made a notable difference. 

In 2018, Walmart developed a proprietary technology, called Redemption, to try to cut down on the deluge of victim-assisted gift-card fraud incidents that were occurring around the nation.

GIFT CARD-DRAINING SCAM: WHAT IT IS AND HOW TO PROTECT YOURSELF

It was developed after Walmart's law enforcement response team fielded an influx of calls about victims who were being tricked into getting a Walmart gift card, loading it with money and giving the pin or gift card number to bad actors.

Victim-assisted gift card fraud is just one of a significant number of gift card scams that have become increasingly common in recent years. In fact, reports of gift card fraud jumped 50% in 2023 compared with the year prior, according to the Better Business Bureau (BBB). 

With victim-assisted gift card fraud in particular, Walmart Chief Security Officer Larry Lundeen told FOX Business that victims would typically get calls from bad actors pretending to be someone else, like a government agency or business.  

These bad actors would create a false sense of urgency and then insist on getting an "immediate payment from the person by way of a gift card," Lundeen explained. 

Typically, with gift card scams, thieves quickly move the funds into foreign bank accounts, according to the BBB. Since gift cards do not have the same protections as credit cards or debit cards, it is "nearly impossible" to recover the money, the BBB reported. 

However, with Redemption, Walmart can spot red flags for gift card fraud and effectively stop the crime during the transaction.

"Where we really invested was creating a technology to try to spot gift card risk at the time of the transaction so that we could freeze the funds in the gift card process so the bad actors wouldn’t get their money," Lundeen said.

Walmart's goal is not just to stop this crime, but to get the money back into the victims' hands. 

"Walmart is not the victim in this, and we're not losing money, but… we wanted to do everything we could to protect our consumers and our customers," Lundeen said.

HOLIDAY SHOPPERS WARNED OF DISTURBING GIFT CARD SCAM LIKELY PADDING CHINESE BANK ACCOUNTS

Once the company accurately intercepts the fraud, the funds are shifted into an escrow account, according to Lundeen. At that point, the U.S. Secret Service, working with the Department of Justice, steps in to help return the funds to consumers through its Victim Witness Program.

Since Walmart's program kicked off, the government has already returned $4 million to thousands of customers. Calls to Walmart’s law enforcement response team are also down by more than half, according to Lundeen.

GET FOX BUSINESS ON THE GO BY CLICKING HERE

This system is only part of Walmart's strategy to combat these crimes.

Ticker	Security	Last	Change	Change %
WMT	WALMART INC.	92.50	+0.62	+0.67%

Walmart has posted signage within its stores and online for consumers to be aware of fraud related to gift cards. It also increased training for its staff to help them detect if a consumer may be buying a gift card for this reason.

Walmart is also on the Elder Gift Card Fraud Task Force, led by the National Cyber Forensic Training Alliance. The task force was created specifically to combat victim-assisted gift card fraud.