Gift card fraud has claimed another victim. Valve is pulling physical gift cards for its popular Steam gaming platform, saying scammers have made the cards too risky to keep on store shelves. Once retailers sell through their remaining inventory—expected by the end of the year—the cards will disappear for good.
Valve said the decision was driven entirely by gift card scams. Gift card codes can be used in a variety of money laundering schemes, and the numbers associated with them can be difficult for issuers to trace.
In a blog post, Steam detailed the measures it has taken in recent years to combat fraud, including adding prominent scam warnings, restricting redemptions to a user’s Steam wallet currency, limiting card availability, and temporarily removing cards from sale when the company detected abnormal activity surrounding them.
“As we have continued to put more and more restrictions in place, scammers have adapted,” the post stated. “They continue to have an impact on Steam customers and other unsuspecting individuals. So we’ve made the difficult decision to end the Steam Gift Card program at retail stores.”
Focus on Digital Cards
Valve will continue to offer digital gift cards, which are generally less vulnerable to fraud. However, abandoning physical cards may be a shortsighted solution.
“Many of the scams Steam is referring to rely on unsuspecting consumers to purchase legitimate and safe gift cards, regardless of if they are digital or physical, and send them to the bad actor,” said Jordan Hirschfield, Director of Prepaid at Javelin Strategy & Research. “In reality, physical gift cards, when developed using high quality vendors for program management, card production and design, incorporate many safeguards as possible.”
New Approaches to Security
New technologies are being developed to improve gift card security. Grocery chain Schnuck Markets recently completed a 10-week pilot program with Digimarc that embedded a tamper-evident digital watermark directly onto gift cards. The watermark replaces the standard activation barcode, which is typically protected by scratch-off strips or bulky packaging designed to deter theft.
“While there continues to be more opportunity in the physical world to tamper with packaging and restock cards, taking proactive precautions with your supply chain can thwart most of that opportunity while still providing a viable and successful channel for gift card sales,” Hirschfield said.
