Or/and, as an alternative, per the man from Singapore, stop using 3rd parties to distribute gift card codes.

> Then they are free to stop offering gift cards.

That's easy to say. [1] [2] [3] But reality is harder than that; keep in mind:

  - Fraud is complex (many moving parts, many pathways)
  - Fraud is adversarial (whack a mole, but worse)
  - Fraud and revenue are two sides of the same coin [4]

[1]: A drive for simplicity is important, in moderation. But here the quote seems to not appreciate the complex reality.

[2]: The response pattern "Then they are free to [foo]" is often part of a rhetorical technique to shift blame and/or responsibility to another party.

[3]: See also the "nirvana fallacy" (i.e. "if you can't do it perfectly, you shouldn't do it at all.") See https://thelogicofscience.com/2016/06/20/the-nirvana-fallacy...

[4]: You can easily imagine a business where lowering customer friction increases both revenue and fraud. What is the ratio between them? How does it change over time?

Another way gift cards have been used is as a means of transferring "wealth" to anonymous scammers.

Dumb people were being scammed in Singapore, until the financial regulator here clamped down on gift cards altogether. It used to be trivial to buy Apple, Google, and Steam gift cards in Singapore convenience stores. They're no longer being sold anywhere.

I'm not sure how requiring gift cards to be bought with cash would help prevent that

Apple only sees the credit card if you buy from them, if you buy from a retailer they don’t get that info.

To be clear, this is their problem, not the customers.

Still, I’m curious what the scammer did in this case. If a retail worker just stole the card number it would merely be used up, not flagged as fraud. Maybe someone in the supply chain obtained the number and reported it lost/stolen? And used that to obtain a new card no one would complain about once it was used? Vs the original number which would result in a customer complaint. Idk.

1. Apple can't see the credit card of anyone who bought a gift card from any third-party retailer

2. The normal use case for a gift card is that it is transferred to a person different than the original purchaser. Launderers also do this.

I remember that article. It's wild the extent to which "anti-fraud" has captured companies, destroyed their UX, and seemingly directs all their actions. And when you criticize it, they blame KYC/AML and cry and act as though they have no agency. A very small tail is wagging the dog!

Your math is wrong.

The merchant wants you to use the card, in all cases, always. Because statistically, you are likely to spend 30-40% more than the card face value, when you do.

The unused portion of the card sits on the merchant's balance sheet as a liability, for years, until they decide to recognize it as revenue ("breakage"). They prefer this over NOT selling a GC, of course, and some merchants (e.g. Starbucks, high volume, low ticket) make a ton of money on breakage. But in all cases, merchants greatly prefer their cards to be used.

You're also wrong about how the fraud works. Usually, the card is not purchased but sniffed prior to legitimate sale. The mechanisms for this vary, but a common method is to literally pull armloads of cards off of display shelves, open and repackage the carriers, then surreptitiously return to shelves for legitimate sale. This is purportedly the process for large organized crime rings based in Asia, mostly China.

And you're wrong about how easy it would be to fix. Packaging costs money, retailers have to be on board for activation, this has to be integrated into POS systems, and it all has to be very easy for consumers.

This is a hard problem at scale, and smart and motivated people on the merchant side, the program manager side, the bank side, and the law enforcement side, would love a simple solution.

...

What is not a hard problem, though, is that Apple should separate "AML investigation in process" from the user's ability to access their own data. This would turn a very large problem (for all involved) into an annoying inconvenience (for the customer).

> Why would you sell a dollar for 90 cents? Because you know that on average you're selling quite a bit less than a dollar.

There's more to it than covering the risk of fraud. It's more about optionality. The gift card only allows for buying things at one place — so you're restricted in what you can buy, can't deposit it at a bank, can't comparison shop etc.

I don't get the sense that money being left on the card is a serious issue for the sort of person who goes hunting for deals like this. They'll eventually spend more than the card's value and have the last of it apply partially to some purchase.

Also the discount rates I've seen have been more like buying the $100 card for $95 or $97. Except perhaps where the gift card retailer is offering it directly as part of a cross-promotion deal with the target retailer.

Breakage is between 10-20% on average, which is just insane.

However, a significant amount of the spending in gift card promotions is from the marketing budget of these companies. They use gift cards to keep you "engaged". They are used the way companies used to give out coupons basically.

Promotions rarely cost much. Keep in mind that even if breakage was zero, every dollar you spend at a company already has a profit margin baked in. Even if you only pay $9 for that $10 of spend at CompanyPlace, they are likely still making a profit. Promotions also have strong limits, so you can't really profit off of them as a consumer.

Except for one time. Once, IKEA ran a promotion that was "Spend $1000, get $100", and chose to set NO LIMITS. People were banking $10k worth of IKEA giftcards "for my future kitchen renovation" and IKEA found out their gift card fulfillment process was.... antiquated. Did you know old versions of Excel only allow for 65k rows of data?

>As for the fraud risk... do they even care?

We care. The brick and mortar store and Apple themselves don't really care, because they pay our company to take that risk, and our entire business is about preventing credit card fraud to reduce how much that risk costs.

>It would be so easy to make gift cards more secure. Modern technology can do a lot better than an alphanumeric code under a sticky cover.

What? What is your idea for better securing these cards? What "Tech" would help?

Note that I have no clue what apple is doing banning this account. We don't tend to ban victims of fraud or crime or scams, especially not for physical cards bought in a store because who knows what actually happened.