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Walmart Introduces Defensive Tactics Amid Growing Threat of Gift Card Scams

Walmart's proprietary technology, Redemption, is transforming the fight against rising gift card scams.
Cover Image Source: Exterior view of a Walmart store | Getty Images | Photo by Kena Betancur
Cover Image Source: Exterior view of a Walmart store | Getty Images | Photo by Kena Betancur

In an age where gift card scams are escalating, Walmart has taken a significant step forward by introducing "Redemption," a proprietary technology. This innovative system is Walmart's answer to the increasing number of victim-assisted gift card fraud incidents. With scams involving gift cards rising by 50% in 2023 compared to the previous year, Walmart's proactive approach marks a critical development in fraud prevention.

Wal-Mart Prepares For
Image Source: Walmart Prepares For "Black Friday" Shopping Mania | Getty Images | Photo by Jeff Zelevansky

The process of victim-assisted gift card fraud typically involves unsuspecting victims being coaxed into purchasing Walmart gift cards and sharing the details with scammers. These criminals often impersonate government agencies or businesses, creating a false sense of urgency to extract immediate payment via these cards. The lack of security associated with gift cards, compared to credit or debit cards, makes it nearly impossible to recover the stolen funds once they are transferred to foreign bank accounts.

Developed in 2018, Redemption aims to identify potential fraud activities during the transaction phase, allowing Walmart to freeze the funds and prevent the completion of such illicit activities. Larry Lundeen, Walmart's Chief Security Officer, emphasized that the technology is designed to spot risks immediately, effectively stopping the scammers from accessing the money.

Amazon gift card in a blue box | Getty Images | Photo by Smith Collection
Image Source: Amazon gift card in a blue box | Getty Images | Photo by Smith Collection

An important part of Walmart's strategy is not just to stop the scam but to ensure that the funds are returned to the victims. Once fraud is detected and intercepted, the funds are transferred to an escrow account. The U.S. Secret Service, in collaboration with the Department of Justice, then steps in to facilitate the reimbursement of victims through its Victim Witness Program. This initiative has been remarkably successful, with the government having returned $4 million to consumers already.

Image Source: GettyImages/Jessica McGowan
Image Source: Getty Images | Photo by Jessica McGowan

Walmart's efforts to fight gift card scams extend beyond the Redemption technology. The retail giant has been educating consumers about such fraud, placing informational signage in stores and online, and warning customers about the risks associated with these scams. Recognizing the importance of frontline defense, Walmart has ramped up training for its employees. The training helps staff members identify and respond to situations where a customer might be purchasing a gift card under fraudulent circumstances. Furthermore, the company plays an active role in the Elder Gift Card Fraud Task Force, led by the National Cyber Forensic Training Alliance. This initiative is dedicated to tackling victim-assisted gift card fraud.

"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. The company's multifaceted approach, anchored by its groundbreaking Redemption technology, marks a significant advancement in the fight against the burgeoning issue of gift card scams. Through technological innovation and collaborative efforts, the company is setting a precedent in safeguarding its customers from the perils of modern-day fraud.