Advocates often incorrectly label all gift card payment requests as scams. This reflects a class-based blind spot, as they misunderstand the legitimate use of "alternative financial services" like gift cards by unbanked or underbanked populations for whom they are a necessary payment rail.
Major retailers use third-party program managers for their gift cards. When a customer is scammed, the retailer deflects responsibility, stating they don't issue the cards. This structure, combined with weak regulation, leaves fraud victims with little recourse, creating an "accountability sink."
Unlike debit cards protected by Regulation E, gift cards are intentionally exempted from strong consumer protection laws. This carve-out, lobbied for by retailers to ease commerce, removes the legal requirement for financial institutions to investigate fraud and reimburse victims, shifting the entire loss to the consumer.
A key reason retailers don't manage their own gift card programs is the legal complexity of "escheatment"—the process of turning over abandoned funds from unused gift cards to the state. Outsourcing this multi-state compliance burden to specialist firms is far more efficient than building the capability internally.