Gift Card Fraud

Be careful when selecting gift cards for your friends and loved ones. Crooks have learned how to exploit this popular form of gift-giving through tampering, trickery and outright theft.

Even when the Holiday season is over, gift card sales are a year round business for many retailers. Because of this we want to bring gift card scams to your attention. These scams can drain the value right out of your card before you get to use it.

“Card Not Present” Scam

The first, and rarest (although it does occur) of these 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.

Image of Gift Cards

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 cards’ 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.

Overstated Value Scams

Another, more common form of gift card fraud, is when a reseller overstates the values of the cards they’re selling. Yet another involves thieves using stolen credit cards to load gift cards which they turn around and sell for cash.

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 thiefs possession) with the funds. Imagine the fun when the card’s recipient attempts to use the card.

How to avoid gift card scams

  • Only purchase gift cards from reputable sources. Better yet, get them directly from the store they’re from.
  • 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.
  • 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.
  • 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 casier 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.
  • 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.
  • Remember 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.
  • Register the gift card if that service is offered.

More on Gift Card Scams

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9 years ago

I purchased three gift cards from American Eagle totally $500.00 to give as gifts for Christmas. When reciprients tried to use the cards they came up with 0 balance. I tried to call the corporate office but no answer. Talked to customer service but pretty much got the run-a-round. What do I do to get this company to give me my money back or new gift cards?

Michael Aprano
9 years ago

I got a gift card to victorias secret for christmas with 100 dollars and 50 cents on it. I was so excited to go to their famous panty raid. You can imagine my surprise when I found there was nothing on the card!!! GCF must be stopped. My mom used the money.

sherry williams
9 years ago

I purchased 5 gift cards from amazon,total 2500 ,to purchase a camper, on line .realizing that I was being scam I call amazon they told me that the people that I gave the codes to did not used them yet ,so amazon cancel them .told me to go back to the store to get your money back,the store told me that once you scan the cards it goes to amazon, called back amazon they cannot help me ,,,what can I do ,,,,,help

Jason Chan
8 years ago

I got scammed for $6000+ for carnival gift cards. Was planning for a wonderful vaca, and now carnival thinks we are fraudsters and put us on the black list… UGH I need to know what to do to get my $$ back!

8 years ago

I have had a Walmat gift card that I have been reloading for about 3 years with no problem until last week when $100 was missing from the card. Not sure how someone could have gotten the number and use the card.

Johnna Smith
7 years ago

I was given a card as going away gift at a job I worked for 18 years last week. I found it was a generous amount of $210.00 (the amount was written on the front of the package because it can be loaded for $20-500). tonight about 6 days later, I removed it from the packaging, and I didn’t notice any signs of tampering. the sticker on the front of the card did say it was active & ready for use. I found that statment odd because I’ve always had to activate the ones I’ve been given in the past. so I went to the website, I wasn’t able to log in because it said the card number & security number do not match. I called the 866 number tried entering the same info, no luck. I get a person on the phone & she tells me she doesn’t find any info on the card number. she can’t tell me if it was ever loaded or reported stolen or ever had a balance. she kept telling me to read the terms and conditions. I read every page plus the FAQ on the site, and no where does it address this situation or how to go about fixing it. I feel terrible thinking about my coworkers all chipping in to get me this card–and frankly I need all the help I can get until I have income coming in again–but I’m not sure what happened to their $210 or why they cannot give me any info whatsoever regarding their card number they manufactured & sold. the website is & it has the VISA logo. I recognize the packaging, and I am fairly sure I’ve received or given this brand’s card in the past. I don’t know what to do. I feel embarrassed contacting my past employer asking about it. how awkward that would be. any advice?

Melissa Kuhl
7 years ago

Has anyone ever had their gift card balance compromised after they loaded it onto their Amazon account? One day I had a $150.00 Gift Card balance, then today it read zero??? Amazon had absolutely no answers for me. I even have a screen shot of my balance right when I redeemed my Gift Card. It clearly says: $150.00 Gift Card successfully redeemed. With a balance of $150.00. It was there for a couple of months, then…BOOM! it was just GONE! With no explanation. No order history…NOTHING! They could only tell me that a Mr. Daniel Rodriguez had redeemed my Gift Card balance to purchase Play Station cards…(Although it clearly states in Amazon Rules & Gift Card regulations that you can not redeem your Gift Card balance in cash, transfer or even buy another gift card with the balance…Weird? Also, there is absolutely no paper trail on my end…(it just seemed to vanish overnight. It had to be an inside job carried out by an Amazon employee…

6 years ago

Like to know why a person
would need a picture of a card after u gave them the code