Quote:
Originally Posted by Manabi
If a credit card has been stolen and gets used, once the chargebacks are made by the credit card company, the business that took the money is left holding the bag financially. The gift cards can't be revoked once they're activated, so the money would be completely lost. The profit margin is likely quite low on them as well. It'd be quite easy to steal a credit card, buy a bunch of gift cards, and basically launder the money into gift cards that way. Same with checks, although it's a bit harder to do, but still not all that hard.
I had my credit card number swiped once (not the card, just the number) and the crooks were running around with a physical card with a different name on it. The stripe didn't scan of course, but the name matched their (likely fake) IDs. I caught it right away thanks to online banking, but even so they were already out of town (one in another state than my own) and several merchants left with hundred dollar losses. They were never caught either. It's only gotten easier for people to steal credit cards since that happened to me, and easier to make fake ones with the data. Just think of all the massive security breaches in the last year alone (like Target's) where credit card data was stolen.
So that's why they restrict it, it keeps them from losing any money on the gift cards, as long as they check the cash to make sure it's not counterfeit. (Which is a heck of a lot easier to do than catching stolen credit cards!)
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Manabí is correct. If a store accepts a credit card, and the Credit Card Company determines that they did not follow all the rules, the store will have the money removed from their bank account. The store will usually get a letter asking for a copy of the charge and any other pertinent information. They have 30 days to reply and not replying will result in an automatic withdrawal. The Credit Card Companies make their money off of fees and they can tack on a lot of little fees. For example, entering the card number manually, if the magnetic strip does not work is an extra charge. It also will result in an automatic chargeback unless the store has a physical imprint of the card, with the customers signature. They automatically assume that the sales was not made in the stores physical location. How many stores still have one of the old imprint machines, I wonder? I do.
The rules that the Credit Card Company requires retailers to follow are many pages long and in exceedingly small print. Failure to follow them will result in the retailer having to eat the sale.
Apache