Often when I think of gift card fraud, I think of crooks who are outside the walls of a company. However, a recent conviction reminds me how the biggest potential for fraudulent losses often comes from within an organization.
Case and point
Recently, a Wisconsin man, Ryan Stanley, was convicted of stealing over $90,000 worth of Eastbay Gift Cards from his employer. A former Eastbay manager, Stanley used the password of a coworker to activate the gift cards. He would cash out by selling the gift cards online below face value.
In the end, Stanley will have to serve three months in Jail and pay all the money back in monthly installments of $300. If my math is correct, Stanley will be paying $300 monthly for the next 25 years. At age 29, Stanley will be making payments until he is 54 years old.
Did Consumers Lose Out?
It's not clear if Eastbay canceled the gift cards after learning they were obtained fraudulently. Naturally, there were a lot of gift cards issuerd and in consumers hands when they company learned of the illegal activity.
This is one reason to prohibit the resale of a gift cards in the Gift Card Terms; however, I still believe consumers who rightfully purchase or are given a gift card should be able to sell it in a secondary market or privately between parties without running the risk of voiding the gift card.