Gift Card Inspection is Your Best Fraud Protection

Learn the basics in identifying card tampering scams.

Date:Nov. 25, 2019

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It’s unlikely that you would buy a chocolate bar if it looked slightly crushed and its wrapper was torn at the edges. The same holds true when buying a gift card.

 

If you’re at a store display and notice a gift card package with stains, tears, curled edges and a scratched barcode – it’s probably trouble. Such visible markings usually mean the gift card has been tampered with to perpetrate fraud. Do not buy it. Report your discovery to the store manager and select a card that is clean and scratch-free with its barcode intact and scannable.

 

Gift card fraudsters have gotten very creative in how they manipulate packaging to swindle consumers. Here are some tampering scams to look out for:

 

 

Card Swap. Thieves shoplift gift cards from a retailer. They remove the original card from the packaging, insert a counterfeit card and re-seal the package. Next, they sneak the phony cards back onto the card racks and wait for a customer to activate the PIN, which is now known by the thieves. Once the card is loaded, they can spend the funds without a trace.

 

Re-encoded magnetic stripe. The fraudsters steal gift cards from retailers and use their own magnetic stripe reader/writer and software to scan the cards. Next, they return some of the scanned cards to the store and wait for a computer program to alert them when the cards are activated and loaded. The fraudsters rewrite the activated cards’ information on to the magnetic stripes of their leftover stolen gift cards, thus creating cloned cards that are ready for spending.

 

Forged barcode sticker. The crooks place a different barcode sticker over the activation barcode on the gift card. This sticker is the barcode from a card the scammer had previously stolen. The cashier scans the false barcode and the scammer’s gift card is loaded, instead. By the time a customer realizes their card hasn’t been activated, the funds are usually gone.

 

With these and other packaging scams out there, being watchful is the best way to protect yourself. Take extra care inspecting gift cards before you buy them. Look at the card package for glue residue, stains and discoloration. Examine barcode stickers to make sure they’re not forged. As an extra safeguard, be sure to save the purchase and activation receipt as it will be helpful information for the gift card issuer and even law enforcement in case you have been victimized.

 

If the unfortunate does occur and you discover that you have purchased a compromised gift card, here are some things you can do:

 

  • Alert the store where you bought the gift card as soon as possible so they can remove any other potentially fraudulent cards from the display.
     
  • If you’re having difficulty recovering the funds – and the gift card was purchased with a credit card – call the credit card issuer and check if they would grant you a refund.
     
  • You can also file a complaint with the Federal Trade Commission (FTC); online or by calling 877-FTC-HELP. The agency may not resolve your fraud case, but it can give sound advice, investigate and relay details to law enforcement.

 

Millions of consumers enjoy purchasing and receiving gift cards each year. Fraudsters have no right to steal anyone’s fun. With a dedicated vigilance from consumers, retailers and financial institutions, fraud can be reduced, and gift cards can be safe and enjoyable for all.

FTC Complaint Assistant