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As prepaid card popularity increases, companies should be wary of fraud

Jan 29, 2013 Sean Albert

Americans are using alternative credit strategies like prepaid cards at increasing rates - and that doesn't just apply to younger generations, according to a Mercator Advisory Group study.

"As we examined opportunities to expand prepaid card sales, we noted that growth will likely come from facilitating the use of prepaid cards as a payment tool," said Karen Augustine, manager of the CustomerMonitor Survey Series at Mercator Advisory Group. 

However, as with many new technologies, prepaid cards present an opportunity to another group of people - scammers. According to a recent Storm? Center 17 report, more hackers are taking advantage of the growing popularity of these cards to facilitate attacks.

Specifically, Green Dot MoneyPak buyers have been targeted. Lloyd Reed told the news source that someone who claimed to work for Green Dot contacted him via social media and said she would add a zero to however much money he put on his card - provided he gave up some of his personal information. 

With prepaid cards growing in popularity - more than half of 35 to 64-year-olds have made purchases them in the past year, according to the Mercator Advisory Group study - businesses and customers alike should be wary of scams. Retailer and online service prepaid cards are especially popular, so these companies should pay extra attention to fraud prevention.