This is the gift card scam that made it onto the news. The crooks have found a way to rob you of your gift card balance. What they are doing, is jotting down the card numbers in the store and then they wait a few days and call to see how much of a balance THEY have on the card. Once they find that the card is “activated”, they go online and start shopping away.
Since, this scheme can only be accomplished by using the cards that are on a display rack in a store, a wise alternative would be for you to purchase your card from a customer service representative, where the gift cards are not viewable to the public.
As bogus as this may sound, it can actually happen. The good news is that it is only happening on a small scale – not very much (or often). Nonetheless, according to KOMO TV in Seattle, Wal-Mart shoppers have already been hit with this scam. A Wal-Mart spokesman says the company “is working with law enforcement at the highest levels possible to rectify the problem and catch the people responsible.”
Here is a more in depth analysis of the scam works:
All gift cards are encoded with a unique number in a magnetic strip that is used to track the usage as well as outstanding balances. This is usually a useful benefit, considering that if you lose the gift card, you can simply report it lost or stolen.
BUT, Now imagine that a scammer comes into a store that displays gift cards on public racks (such as Wal-Mart) with a small and “inexpensive” mag-strip scanner in his/her pocket. This scanner can easily read and store the unique card’s serial numbers.
So, the scammer merely grabs some of these gift cards from the rack, finds a serene place and quickly goes to work. He/She scans each card to get its unique serial number. They then put the cards back (or leave them somewhere IN THE STORE) since they are done with them. (OR, there is an alternative: The crook can always ditch the high-tech approach and can simply copy the unique numbers by hand on a pad of paper. However, this is much more time consuming.) Either way, they get the unique numbers, and leave the cards IN THE STORE.
Next, bona fide customers come in to buy some of these gift cards and “charge” them with real money.
Every few days, the scammer calls the gift card phone number and enters the unique numbers to find out which cards have been charged and what the remaining balances are.
Most of these systems DON’T require a password, so it is very easy for the crook to do this. Other times the crook is able to steal the PIN at the same time as the gift card number. He/She can then go on a shopping spree and drain the gift card balances.
If the scammer is somewhat more technically sophisticated, they can even purchase a similar real gift card, charge it with $5, and then reprogram the card with a stolen unique ID number, and then use the card to “physically” shop in the store instead of being “limited” to shopping online.
Even though this is the most heard about gift card scam, there are a couple more that need not go unmentioned.
One, Crooks swap blank gift cards that they stole on previous trips to a store for cards activated by clerks when they purchase them. Since the clerks don’t realize that the returned cards are blank rather than the ones just purchased, the scammers are able to steal fully charged cards.
Two, Thieves also carefully open the packaging of new gift cards and replace them with used, worthless cards. When the card is sold, the gift card the scammer has in his possession gets activated, rather than the worthless used card that the real buyer has. (This only works on some types of cards.)
According to ScamBusters.org, There are several things that you can do to protect yourself against any Gift Card Scam, and here they are:
1. “Don’t buy gift cards from online auction sites. Since this
is a large source of gift card fraud, these cheap gift cards
may well be worthless to you. Sure, some of these cards are
real, but many are stolen, counterfeit or used. It’s not
worth the risk.”
2. “Only buy gift cards directly from the store issuing the
gift card or from a secure retailer’s website — no matter how
much cheaper they may be somewhere else. If you do buy a gift
card online, make sure you buy it from the place that you plan
to use it.”
3. “Don’t buy gift cards off of publicly displayed racks in
retail stores. In addition, don’t assume that because gift
cards are inaccessible to the public, they are safe. After
all, store employees can participate in gift card scams too.”
4. “Always carefully examine both the front and back of a gift
card before you buy it. If you can see a PIN number, put the
card back and get a different one. If a gift card looks like
it could have been tampered with, don’t buy that gift card.”
5. “Always ask the store cashier to scan the gift card in front
of you. This will guarantee that your card is valid when you
buy it and that it reflects the balance you just charged it
with. This will also protect you from crooks who exchange
worthless cards for the cards you think you are buying.”
6. “Always keep your receipt as a proof of purchase as long as
there is money stored on the gift card. Since many retailers
can track where the gift card was purchased, activated and
used, if the card is stolen, some retailers will replace the
card for you if you have your receipt.”
7. “If possible, register your gift card at the store’s
website. Although not all stores offer this option, you can
uncover any misuse of your gift card sooner and report it more
8. “Finally, never, ever give your Social Security number, date
of birth or any other unneeded private information when you
purchase a gift card. No reputable company will ask for this
And that does it! Gift cards, with a doubt, are very popular (especially around the Holiday Season), and they are great gifts to give to your friends and family. Just remember to be cautious when shopping for them.