Gift Card Case Study

Digimarc-protected gift cards prevent fraud at Schnucks checkout

Gift card fraud is more pervasive than ever, eroding consumer trust and costing retailers, brands, and consumers hundreds of millions of dollars annually. Why? Because bad actors are able to quickly defeat new physical safeguards — often as soon as they are introduced. That’s why Schnucks Markets decided to implement Digimarc’s technology-enabled gift card security solution.

Challenge

Schnucks Markets, a regional grocery retailer, faced rising incidents of gift card fraud. Not only were the direct and indirect financial costs adding up, but customers were also losing brand trust. It was clear to management that traditional physical security layers built into card packaging weren't deterring bad actors—and manual card inspections by cashiers couldn't reliably detect tampered cards.

Digimarc Solution

Digimarc partnered with Schnucks, Blackhawk Network, Westrock, STL Labels, Zebra Technologies, and four major brands to implement its new security solution: replacing gift card activation barcodes with Digimarc’s tamper-evident solution. Tampered cards wouldn't activate, automatically stopping fraud at point of activation, whereas untampered cards activated instantly upon scanning. No changes to merchandising, network activation, or POS systems were required.

Results

Over a 10-week period across 10 St. Louis Schnucks stores: 

• There were no reports of fraud on Digimarc-secured cards—a significant improvement compared to 1) incidents of fraud on cards not secured by Digimarc over this same period and 2) incidents of fraud on participating brands’ cards over a comparable period prior to adopting Digimarc.
• 100% of Digimarc-protected gift cards activated successfully.
• 87% of cashiers said cards protected by the Digimarc solution activated as fast or faster than traditional giftcards, resulting in faster checkout.
• Cashiers no longer needed to open complex packaging or examine gift cards for fraud, which further streamlined checkout.
• No training was needed for customers at self-service checkout.

“We are confident the watermarked gift cards developed by the Digimarc team will significantly mitigate the persistent gift card fraud prevalent within the retail sector. From the initial planning and discovery phases through the completion of the pilot program, the Digimarc team consistently prioritized and addressed our concerns while maintaining a seamless experience for both our customers and our checkers.”

— Dianna Kaiser, Schnucks Store Auditor and Compliance Officer