A New Variation of Gift Card Scams Tricks You At the Store

Scammers love gift cards. They’re instant, practically untraceable, and have no protections against fraudulent transactions. And it’s a lot easier to walk someone through going to a store and getting a gift card than it is to walk them through buying and sending cryptocurrency or creating a Venmo account. So it makes sense that one of their favorite ways to get paid for scams is a gift card.

But what if scammers could steal the funds you put on a gift card without actually going through the hassle of convincing you to pay them? Scammers want easy money, and it doesn’t get much easier than waiting for you to voluntarily buy a gift card and then snatching that money. With their latest trick, known as “gift card draining,” scammers tamper with legitimate cards so your money goes to them instead.

How Gift Card Draining Works

There are multiple different ways scammers can pull off these gift card scams. One way is by replacing the barcode. Every gift card has a barcode on the back of the packaging. When you take it to the cashier to buy it, they scan that gift card, which gives the system the gift card account information. Then it can put the money you want to put on the gift card into that gift card account.

Scammers trick you into refilling their gift cards by covering the real barcode with a sticker. That sticker has the gift card account information for an account the scammer owns. You think you’re putting $25 on an Xbox gift card for your nephew’s birthday, but the fake barcode tricks the system into sending that $25 to a scammer’s Google Play gift card five thousand miles away.

Another trick they use is tampering with the gift cards themselves. This is most common in stores that have the gift cards themselves out on racks for customers to browse. Scammers steal a bunch of these cards and take them home. They carefully open up the packaging, record the card’s information, and re-seal the packaging. Finally, they take the gift cards back to the store and put them back on the rack. The cards don’t have any money at this point. But the scammers can use the information they got to register the account online. Once someone buys that card, the money goes onto the account controlled by the scammer. All they have to do is move the money somewhere else and you’re left with a worthless card.

Why It’s So Hard to Catch Gift Card Scams

Scams like gift card draining are often challenging to catch. Some of that is because people don’t know to watch for them. Who’s going to think that scammers would do anything to a gift card that hasn’t been bought? After all, the package very clearly states it’s not worth any money until a cashier activates it. If people don’t know it’s a risk, they don’t check, and potentially end up with a compromised card.

Another reason these gift card scams are hard to catch is because gift cards are, as the name implies, usually gifts. The person who bought the card isn’t the person who ultimately uses the card. So if someone goes to use a card they got for a gift and it doesn’t work, it can be really challenging to diagnose what the problem is, let alone figure out that it’s fraud.

A third reason is that people often don’t use gift cards immediately. Think of how many times you’ve gotten a gift card and it’s sat in your purse or wallet (or sock drawer) for years before you finally remembered you had it or found an occasion to use it. If you go to use a gift card that’s been sitting in a drawer for a few years and it doesn’t work, you’re not thinking about gift card scams – you’re thinking that it’s just too old or the card had fees that drained the balance.

Protect Yourself When Buying Gift Cards

Now that you know these gift card scams are out there, you can watch out for them. Your best defense against buying a card that a scammer has tampered with is looking before you buy. Check for any signs of damage or tampering to the packaging. Rips or tears, broken stickers, revealed security codes, or wrinkles in the packaging are all signs that some funny business is going on with that card. Show the damage to a cashier or store manager, and do not buy it!

Here are some other things you can do to avoid buying compromised gift cards.

Check the Barcodes

Stickers aren’t very thick, but they still rise just a little bit off whatever they’re stuck on. If a scammer is running a gift card scam by replacing barcodes, you’ll be able to tell. Run your finger over the barcode on the back of the gift card, especially focusing around the edges. If you feel anything raised or rough, don’t buy.

Buy from the Back of the Rack

When scammers bring compromised gift cards to put back on the rack, they generally put them right on top. After all, they’re trying to avoid getting caught in their funny business, and moving compromised gift cards to the back of the rack takes time and effort they don’t want to spend. So if you’re buying gift cards from a rack in a store, grab one from the back of the pack. It’s much less likely to be compromised. Still check it for warning signs, though!

Choose Securely-Stored Cards When Possible

The best kind of gift card rack to buy from is one that’s in view of a cashier. Scammers are much less likely to tamper with cards if they have a higher chance of getting caught. That doesn’t make these cards immune from gift card scams, though. That’s why the safest choice is always to buy from stores that keep their gift cards locked away where customers can’t access them. Costco, for example, lets customers browse cardboard reproductions. The real gift cards are stored in a locked glass case and only removed and activated once you buy. This is the safest option because criminals have no way to get to the cards before they’re sold. It goes directly from the glass case to the cashier’s hands to you.

Buy Gift Cards Online Directly

If you’re buying a gift card online, you don’t have the opportunity to check the card for signs of tampering before you buy it. And it’s difficult to find out if a gift card you buy online was stored securely. So your best option is to buy directly from the manufacturer. Buy your Taco Bell gift cards at tacobell.com and your Best Buy gift cards at bestbuy.com instead of trusting sellers in an online marketplace. Have the card shipped to you, and then check for any signs of tampering. If you find some, contact customer service. Tell them the card looks like it’s been tampered with and you want a replacement.

Choose Digital Gift Cards

Iif you’re already buying gift cards online, there’s an even safer option available: Purchase digital cards! Many companies and retailers allow you to send digital gift cards, where instead of mailing a physical gift card to you (or your gift recipient), they send a redemption code by email. It’s much harder to run these kinds of gift card scams when the gift cards don’t exist in the physical world.

Be Suspicious of Great Deals

A deal that seems too good to be true is almost always a scam. That’s true when buying gift cards, as well. Be suspicious of any store, especially online stores, or any advertising offering a great deal on any kind of gift card. They may be selling cards they’ve tampered with or cards where they’ve already registered the account to get the money. Or they may just take your money and never send you the gift card in the first place. Either way, the savings aren’t worth the risk.

Keep the Receipt

No matter where you bought the gift card or what your intentions for it, hold on to the receipt. If something goes wrong, it will come in handy.

How Gift Card Recipients can Protect Against Gift Card Scams

Unfortunately, a lot of the methods to protect yourself from gift card scams are at the point of purchase. If you were given a compromised gift card, chances are good that the money has already been stolen. But there are still some steps you can take.

Check for Signs of Tampering

The person who gave you the gift card may not be aware that gift card scams are out there. When you receive a gift card, check the package for the signs of suspicious activity that we mentioned previously. If you find any, contact the person who gave you the card. Explain about gift card scams and say why you’re suspicious. Then help them report the problem (more on that later).

Register the Card ASAP

Not all merchants allow you to register a gift card. But for those that do, make sure you register your gift card as soon as you get it. This often will let you set or change a PIN for extra security. If a scammer wrote down your card’s information but hasn’t had a chance to register the card, you’ll be able to protect the balance.

Be Careful when Checking Your Balance

There are lots of websites out there that will let you check the balance on a gift card. But not all of them are legitimate. These sites require you to enter the card’s number and PIN or security code. So scammers are happy to set up fake sites to steal that information. When you check your balance, they steal it. Only use the website printed on the back of the card to check your card’s balance, never any other site.

Use it Quickly

The longer a gift card sits around with a balance on it, the more likely it is for a cybercriminal to snatch it. As nice as it can be to save a gift card for a special occasion or a rainy day, it’s safer to use it as soon as you can.

What to Do if You Encounter a Gift Card Scam

So you purchased a gift card, or received it as a gift. You’re expecting money to be on that card. But when you try to register it, check the balance online, or try to use it, there’s nothing there. You’ve encountered a gift card scam. Now what?

Now it’s time to report it. First, call the number on the back of the card and report the fraud. They may not have anything they can do, but reporting it helps companies realize how big of a problem gift card scams are and take steps towards fighting them or providing recovery options. Next, report it to the retailer where you bought the card. Because this type of scam is becoming more common, they may have a policy or option for recourse. This is where having the receipt comes in handy, and also why it’s important to check the balance, register the card, or use it as soon as you can. It’s much easier for a company to deal with fraud that happened earlier this week than fraud that happened a year ago.

Finally, report it to the Federal Trade Commission (FTC) and your local law enforcement. They probably won’t be able to do anything right now. But your report helps local and federal law enforcement track criminals, and potentially catch them and recover your money. And it also helps the people in charge to realize that these types of crimes are a big problem, and therefore allocate more resources to fighting them in the future.