Protecting Gift Card Sales From Fraud
Gift cards gave customers a quick and easy way to share the Texas de Brazil experience, but their cash-like nature also made them an attractive target for fraud. Fraudulent gift card transactions were creating direct financial exposure, and the potential for chargebacks, for Texas de Brazil, and recovering the value was next to impossible after a purchase.
The problem extended beyond financial losses, too, as managing fraudulent transactions and disputes forced the Texas de Brazil team to shift its focus. Every hour spent investigating suspicious activity or addressing chargebacks was time that could otherwise be devoted to improving the customer experience, so fraud was hurting business growth, as well.
Texas de Brazil needed a way to address gift card fraud without getting in the way of its legitimate customers. A fraud solution that blocked more transactions could reduce risk, but it could also prevent real customers from buying gift cards.
The goal was to figure out how to reduce fraudulent gift card transactions and chargeback exposure while still approving legitimate orders. Just as importantly, Texas de Brazil wanted a solution that would not add significant work for its team.
Why Are Gift Cards a High-Risk Fraud Category?
Fraudsters often focus on gift cards because they're easy to buy online and difficult to track afterwards. Recovering the funds after the card has been used is also next to impossible.
This type of fraud is common, as the Federal Trade Commission’s (FTC) Consumer Sentinel Data Book reported 41,120 fraud incidents involving gift cards or reload cards in 2024. Consumers reported $212 million in losses that same year, so gift card fraud is a massive problem that isn't showing any signs of slowing down.
The risk is particularly high for companies that sell gift cards online. Fraudsters can use stolen payment credentials to purchase gift cards, and then quickly redeem or resell them. The card might have already been used by the time a transaction is identified as fraudulent, so there's no way to get the money back.
Adding to the problem is the fact that legitimate gift card purchases often look similar to fraudulent ones. Customers may make unusually large purchases when buying gifts for holidays or corporate events, or buy cards for someone who lives in another location. Businesses can't automatically decline transactions based on these risk signals because that will likely create false declines and frustrated customers.
The challenge for Texas de Brazil was finding a way to spot fraudulent gift card orders while letting real customers buy these cards without adding extra steps.
A Phased Approach to Gift Card Fraud Prevention
Texas de Brazil partnered with ClearSale to address its gift card fraud challenge with ClearSale's Service Decision Engine. This solution wasn't applied across its entire organization from the start, as the company took a targeted approach and focused directly on gift card purchases.
The results gave Texas de Brazil confidence to use the Decision Engine in other ways. What began as a targeted application for gift card orders became a broader fraud-prevention strategy as the company saw the value of applying the same approach beyond that initial segment.
The phased rollout also helped keep the solution low lift for the Texas de Brazil team. The company didn't have to add another layer of manual fraud management because ClearSale helped reduce the burden associated with fraudulent transactions and chargebacks.
Overall, Texas de Brazil gained:
- Targeted fraud protection: The Service Decision Engine was first applied to the highest-risk gift card order segment, allowing Texas de Brazil to address a specific source of fraud.
- Protection for legitimate customers: The approach focused on reducing fraud while continuing to approve legitimate gift card purchases, helping limit unnecessary declines.
- A path to broader protection: Strong initial results gave Texas de Brazil the confidence to expand the Decision Engine to additional sites.
- Less operational burden: ClearSale allowed the team to spend less time managing disputes and more time focused on the customer experience by helping reduce fraud and chargeback exposure.
97% of Gift Card Orders Approved in 2025
Texas de Brazil thought it might have to choose between fraud protection and a smooth gift card experience, but it didn't come to that. The company approved 97% of its gift card orders in 2025, showing that it's possible to focus on a high-risk purchase category while continuing to serve the vast majority of legitimate customers.
The fraud-prevention success didn't stop with gift cards, either, as after seeing strong results on that front, Texas de Brazil expanded use of ClearSale's Decision Engine to additional sites. That rollout showed the company's confidence in ClearSale to help manage fraud risk without turning away real customers.
The partnership also helped reduce the operational cost of fraud. There was less fraud and chargeback exposure, so the Texas de Brazil team had fewer disputes to manage and more time to focus on the customer experience.
