Gift Card Scam – Here’s How to Avoid It

Published in Class Actions on August 31, 2018

Sales of gift cards are predicted to hit $160 billion dollars this year. So, you would think stores would work hard to make sure shoppers keep buying them.  But one of the biggest retailers in the world has run into a problem with the cards it sells in its own name.  Walmart was just hit with a class action lawsuit filed by Douglas, Haun & Heidemann, P.C., over fraud connected with its cards.  In a simplified version, here’s how it works:  criminals remove security tape from the back of the gift cards, then photograph the PIN number and replace the tape with a similar-looking product.  After the cards have been purchased by unsuspecting consumers but before they have been given out as a gift, the criminals will activate the cards and make purchases with them.  The criminals then use up all the money on the gift cards before the recipient uses it.  When the recipient attempts to make a purchase with the gift card, they find out that the funds have already been used and they are holding a worthless piece of plastic.

There are some clues to prevent the money you put onto a gift card from being stolen before the intended recipient can spend it.   Check to see if the security tape on the card is crooked or it’s evident a larger piece of tape had once been in that spot.  Don’t buy cards off the rack but purchase gift cards that come in secure packaging or kept only behind the counter to avoid the scam.

Gift cards have become a big target for criminals. There are other scams from criminals that have become more sophisticated in nature other than scamming the PIN numbers in the retail stores.  There are hackers using botnets, networks of thousands of hijacked computers, which carry out automated actions of stealing gift card account numbers and PINs from online gift card sales.  Some but not all gift card companies are using botnet defense services.

Another way to protect yourself from this scam is to buy gift cards online only directly from the retailer. Criminals don’t have easy access to those cards.  If you find your card has been drained before you use it, ask for reimbursement of your stolen funds.