Complex Systems with Patrick McKenzie (patio11) Gift cards and the fraud supply chain
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Dec 26, 2025 Explore the paradox of gift cards as both a valid payment method and a key channel for fraud. Delve into why most retailers don't manage their own gift card programs, outsourcing to managers that complicate accountability. Learn about the lack of regulatory protections for gift cards and the implications of lighter regulations. Discover how these factors contribute to fraud victims feeling helpless and the unique challenges unregulated gift cards pose to both consumers and businesses.
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Gift Cards As Real Payment Rail
- Gift cards are a legitimate payment rail used by billions and by companies serving the unbanked.
- They provide real financial access rather than being inherently fraudulent, Patrick McKenzie explains.
Scale And Mechanism Of Gift Card Scams
- Gift card scams are huge and often persuade vulnerable people to reveal card numbers and PINs.
- Scammers convert card value via a fraud supply chain into cash, crypto, goods, or laundered funds.
Regulatory Protection Differs By Payment Type
- Card marketplaces must prevent being used as instruments for exploitation, which is a major operational focus.
- U.S. regulations protect debit card victims more robustly than gift card victims via liability transfer mechanisms.