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Beware of Gift Card Fraud

In the post-holiday season, it's easy to forget about some of the scams that take advantage where you least expect it.


Following the holidays, many people are eager to spend their gift cards both in stores and online.

However, criminals have devised ways to exploit those gifts in several ways that it is important to be aware of.

The Northampton Township Police Department sent out tips via the Bucks County Crimes Against Older Adults Task Force that offer a few suggestions and reminders when it comes to spending those holiday gift cards and the safest way to make sure you don't get scammed.

"I would add that regardless of our age, everyone should review and play attention to the timely information contained in the Fraud Alert," Chief Barry Pilla said.

How to avoid gift card scams:

  1. Only purchase gift cards from reputable sources. Better yet, get them directly from the store they're from.
  2. Don't assume that if a store has gift cards under lock and key it means they haven't been tampered with and their numbers accessed. Carefully examine both sides of the card and look for signs of tampering such as an exposed PIN. If you find anything questionable, ask for another card and check it out, too. Repeat as many times as necessary.
  3. Online gift card purchases should be made from the website of the retailer they are intended to be used at. Never buy them on auction sites even if it looks like a great deal. Remind yourself that these cards may be stolen or counterfeit.
  4. Keep your receipt as proof of purchase until the cards value has been exhausted. If you lose the card you may be able to show a cashier at the retailer your receipt and have them issue you a new gift card. Not every retailer will do this but many will. It's worth asking.
  5. Have your cashier scan the card at the time of purchase to ensure that gift card you buy is valid and has the correct balance.

The first scam is called the Card Not Present or "CNP" scam. Swindlers record the numbers on cards offered for sale, then periodically check to see if the cards bearing those numbers have gone "live". By "live" we mean that the cards were sold, activated and had a monetary value added to them. When they find cards that have, they use them to make online "card not present" (aka "CNP") purchases. Using the gift card this way allows the scammer to drain them of their cash values before their intended recipients can use them.

This doesn't work on all gift cards, however, just the ones allowing "card not present" situations such as online transactions. While a scam artist can, in many cases, easily physically access gift card numbers by prying the card from its packaging and putting it back once the number is written down, it's not not easy to hide the fact that the card's PIN number is now visible. Once the covering has been scratched away it can't be put back. Ironically, the packaging itself can conceal that the card has been tampered with.

If you then purchased one of these cards, the fact that it had been tampered with and its PIN number coating removed might go undetected until its recipient attempts to use it. Many people don't understand the importance of the PIN number anyway, so a scratched off PIN coating might not raise any alarm. We suggest that consumers only purchase cards stored in secure locations that make tampering difficult. We can't let that piece of advice go without letting you know that store clerks have also been known to engage in this scam. So purchasing gift cards stored under lock and key may reduce your chances of being ripped off but it won't guarantee protection from this scam.

Whether you choose a gift card from a store display or have a clerk hand it to you, always take the time to examine both side of the packaging before paying for it. Better yet, remove the packaging before you leave the store. If you can see the PIN number or detect signs of tampering, don't pay for the card or ask for another. Let the store's management know why. If the card can't be used for online or "card not present" purchases you don't have to worry as much because the thief would need the card in hand to use it.

Other ways gift cards have been abused by criminals:

  • Employees at stores where gift cards are sold steal them from their displays, activate them with store scanners, then go on shopping sprees. Sometimes they use the stolen cards to purchase new cards to launder their stolen merchandise.
  • Thieves pretending to be customers engage in sleight of hand by swapping blanks (previously stolen) for new cards activated by clerks during a sale, then change their minds and cancel their purchases. The clerks are clueless because they think they got the new cards back and the thief walks out of the store with the new card in their pocket.
  • Stolen cards can end up on auction websites where the unsuspecting bid on them to get a good deal. The National Retail Federation advises consumers to only buy gift cards online from a reputable dealer and never through an online auction because what you bid on may well be a stolen or counterfeit gift card.
  • Crooks will carefully slit open bar code-bearing gift card packaging to remove new, unsold cards and replace them with cards that have had their funds drained. When these "empty" cards are sold, the activation of the packaging's bard code loads the real card (in a thief's possession) with the funds. 

Remember also that no reputable business will require you to provide your social security number, bank account information or date of birth in order to purchase a gift card. Asking for this kind of personal data is unnecessary and has nothing to do with purchasing a gift card. You're not applying for credit.

Stephanie Morrison January 05, 2012 at 10:56 PM
buy gift cards in bulk to save money, www.bulkgiftcarddiscounts.com is a good place to start


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