Three Types of Prepaid Fraud

Over the past few years there has been a shift in the market when it comes to fraud. Five or more years ago, you saw messages everywhere about keeping your debit card safe, and to never give your banking or credit card information to anyone. But no one really focused on prepaid products. The fraudsters were too busy working on their next debit skimming plan or credit card scam. Then one day, we started receiving calls from our retailers asking why we didn’t cancel the prepaid voucher they printed like we said we would? We quickly realized that fraudsters have been calling our locations impersonating our support team and stealing PIN information from vouchers. That is when the shift began to take place from traditional debit and credit fraud to a focus on the prepaid world.

We have been introduced to several types of consumer and business/retail fraud relating to prepaid products and the outcome of the scam is always the same. The fraudster is asking the victim for the PIN, which is the critical number on the voucher or the code scratched off on the back of the card. This information is the equivalent to cash, so as soon as this information is given, the fraudsters is already spending the funds.

In our experience, these are the top three fraud scenarios relating to retailer and consumer fraud:

Retailer Fraud

1. Impersonating suppliers like Now Prepay/ Payment Source requesting ‘troubleshooting’ and printing products. They then request the critical voucher data referred to as the PIN in order to ‘cancel’ the transaction.
2. Retailers are also receiving calls from fraudsters impersonating a technology organization, utility company, or government program like Microsoft, Hydro One, or CRA. They claim the business owes hundreds to thousands of dollars and to avoid loss of services or jail time, they must make payment by providing PINs to online prepaid payment vouchers, prepaid credit cards, or iTunes.
3. Fraudsters have also tried to convince retailers to download items on their computer claiming they are needed to complete product updates, try to obtain our web based portals user name and passwords, and have even posted online ads for various products to be purchased using our Company name.

Consumer Fraud

1. Impersonating a CRA rep and requesting back tax payments by purchasing prepaid products like online prepaid payment vouchers and most recently, iTunes. In seven months within 2016, it was reported that over 400 Canadians were scammed with loses well over $1.7 million in iTunes card numbers/PINs were given to fraudsters to ‘pay’ for apparent back taxes owed.
2. Online purchases through Kijiji, Facebook, eBay, etc, where the seller is requesting payment using online prepaid payment vouchers, prepaid financial products, or even iTunes. Some recent examples are consumers purchasing pets off of websites, buying electronic products, and musical instruments that don’t actually exist.
3. Romance scams are becoming quite popular again. Some recent examples are partners connecting online that get ‘stuck’ travelling and need money to get home, or want to travel to see their partner so convince them to purchase online prepaid payment vouchers or prepaid financial products.

For more examples and information of retail and consumer fraud, including other scams to watch out for, visit www.paymentsource.ca/now-prepay/fraud-alerts. We encourage all retailers that are offering a prepaid program in their stores to also visit this site for specific warnings relating to key products.

In my next blog, I will speak on what to watch out for, so you do not become the next victim.