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Best Ways to Stop Retail Fraud: Guide for Business Owners

Fraud attacks on gift card retail businesses are becoming more and more prominent every year, and the pandemic certainly had an impact. In Canada, retail fraud has increased a whole 15% since pre-pandemic and is now costing Canadian retailers hundreds of millions of dollars every year (see source). With this trend, it is crucial you are aware of fraud, so here are some popular forms of fraud and how to protect yourself from them.


Pretend to be calling from your prepaid supplier

This form of fraud is very popular and is also one of the most difficult to detect. Fraudsters will call your location stating that they are calling from your prepaid card supplier and may ask you to activate gift cards, online payment products, phone vouchers, and any other form of digital cash. They may say that they are seeing difficulties with a certain prepaid card and need you to activate and provide the pin over the phone to confirm they are valid. They may also say cards are expiring or need a test and ask for the same thing. They most often promise that you will not be charged or will be refunded. This is NOT the case. Your prepaid supplier will never ask you to activate a card and provide a pin over the phone.

How you can protect yourself

As mentioned, this type of fraud can be difficult to detect, so here are ways to protect yourself.

  • Hang up the phone: Although it seems obvious, hanging up the phone if this type of fraud occurs the best way to protect yourself. After hanging up, call your prepaid provider back at their actual number to report the scam.

  • Inform your employees: After receiving this call and preventing fraud, the fraudsters may not be done. Despite what many people think, fraud is not a one-time thing. Some fraudsters try again and again to hopefully succeed or convince someone that they are legit. Making a note or advising your entire staff of this will help ensure that no one falls victim to this fraud.


Fear factor

This type of fraud can happen over the phone or in person. The fraudster will come in and start causing a scene building a sense of urgency and will often elevate their voice to try and make you scared. They usually will say they require a refund for something they didn't buy, say a gift card they purchased did not work and was thrown out, or say a prepaid card did not have the balance requested. These are just a few examples of popular methods. They aim to get you to crack under pressure they build in order to receive compensation from you.

How to protect yourself

  • Stay calm: The point of this strategy is to make you panic and give them what they want. Staying calm puts you in control and helps you manage the situation effectively. You can ask them to leave or call the police if you begin to feel threatened.

  • Demand proof: It can sometimes be hard to determine if an individual is a fraudster or just an unhappy customer whom you may not want to disappoint. If you are in this position, it is best to ask for proof of their issue, such as a receipt, search up the card they used, or call your prepaid provider to confirm the problem they are having.


Credit card fraud

This type of fraud is popular with prepaid retailers. If a fraudster gets ahold of someone's credit card or credit card information, they may come in asking for a large amount of digital cash in order to spend funds easier without having the card blocked on them. You may feel like this does not affect you; however, the last thing your business would want is to deal with an investigation or lose your customers' trust.

How to protect yourself

  • Check ID: Checking a customer's ID to ensure it matches the name on their credit card can be a great way to ensure that you are protected from this fraud. Checking for every transaction may be too much, but it is a good idea for very high amounts.

  • Accept a different method of payment: Asking the customer to pay cash or even debit can be a good way to prevent this type of fraud as well. You are still allowing your customer to pay while also protecting yourself by doing this.

  • Ask questions: If you feel that a transaction is not legitimate, it is okay to ask questions such as, “why are you purchasing this.” 


It is important as a prepaid retailer that you are aware and have fraud at the back of your mind to protect yourself and your customers. The new knowledge you have gained will help you effectively detect popular forms of fraud as well as how to protect yourself if you are ever in one of these situations as a retailer. Fraud is becoming more common and more expensive every year. Make sure you are protecting yourself. 

Learn more about Fraud on our Fraud page.

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