Are You Buying Gift Cards for Scammers? Gift Cards Scams Are Growing!

Gift card scams are becoming more popular with fraudsters

Think twice before buying gift cards off a store rack: You need to know about gift card draining and other gift card scams.

Beware: because of scams like gift card draining, you really need to think twice and be on your toes when buying a gift card from a gift card stand at a supermarket or a drug store. Buying a gift card is one of the quickest and easiest ways to shop during the holidays or to get a gift for a birthday, anniversary, graduation, or just to say, “thanks for being you!”

It’s so quick and easy that scammers have found a way to steal the value of the gift card right from under your nose.

Fraudsters and thieves have concocted a gift card scheme so clever you might never know you were scammed.

And how sad is that?

In fact, you might have in your possession, or perhaps have given to someone, a worthless gift card. How? Because a thief has already stolen the funds it’s supposed to hold.

Beware of Gift Card Draining Infographic

Could you be a victim of a gift card scam?

Yes! You could be a victim of a scam in two ways! Here’s how.

As a gift card purchaser: It’s not so much that you’re losing money (you were willing to spend money on a gift anyway), but it’s that you wind up giving a gift to a scammer instead of a friend or family member…and that’s disheartening.
As a gift card recipient: If you’re holding a gift card whose value has been drained, it’s like holding a sealed envelope you think has cash in it, but really has a blank sheet of paper…or one just that simply reads, “too bad, sucker.”

In fact, you could have a worthless gift card right now.

You could have an unused gift card stored away that someone gave you for $25, $50, or $100 for Target, Home Depot, or your favorite restaurant. However, you won’t really know if the card is worth its face value until you use it to buy something at the store or online. Hopefully, the card still has its value. However…

If the person who gave you the card unknowingly purchased a gift card that had been tampered with by a scammer, the card’s value might have already been drained.
Sadly, there’s no way to find out who the scammer is or to get the value of your gift card replaced. It’s as if you were simply given a blank gift card.

NOTE: Sometimes you have to register a gift card to activate it fully. Make sure that’s not the case before assuming the gift card has been drained.

You can be a victim of a gift card-draining scam in two ways:

As a gift card purchaser or a gift card recipient.

How scammers drain gift cards and go undetected.

The key to the thieves’ gift card-draining scam involves multiple steps:

Step 1. Taking gift cards available for sale off store racks. You could call it stealing, but the unsold gift cards have no value till their purchased, which activates them. Some criminals have been caught with thousands of these “stolen” gift cards!
Step 2. Tampering with the cards they take. Outside the store, they open the gift card, then copy or record the important, valuable information on its back. This could include the card’s barcode, PIN, and the numbers revealed when the card is opened. They then carefully put the gift card packaging back together as best they could to hide the tampering.
Step 3. Placing the tampered gift cards back on the shelf! That’s an easy step for the scammer because it appears they are choosing a card to buy.
Step 4. Keeping tabs on the gift card account. There are a few ways scammers can find out when an unsuspecting shopper has purchased the gift card they’ve tampered with. They could use sophisticated technology or just try to time it right.

Time is on the scammers’ side. Remember, many people don’t rush out to use a gift card the day they get it. A scammer might have a few weeks to cash in on the gift card that’s waiting to be used.

Tips for avoiding the gift card draining scam when buying one.

Given how sneaky these scams are, a bit of caution goes a long way. Here’s how you can minimize risks when buying gift cards.

Don’t buy gift cards that aren’t secured behind a counter. Don’tbuy any gift card that someone may have picked out and put back.
Buy a digital gift card (eCard). You can buy a variety of gift “cards” that aren’t physical cards at all but are instead electronic. For instance, if you Googled, “Can I buy a digital Target gift card,” here’s the answer you get: “Yes, you absolutely can buy digital Target gift cards (eGiftCards) directly from Target.com, with instant or scheduled delivery via email or text, and they work both online at Target.com and in physical stores by showing the barcode on your phone.”
Examine the gift card packaging carefully before buying one. Perhaps you could inspect several gift cards at once to see if any look tampered with and avoid them.
Buy a gift card before it’s stocked on the rack. You might ask a florist to set aside the freshest roses before they’re displayed for anyone. Do the same with a gift card. Ask the store manager to set aside the newly delivered gift cards for you.
Stop buying gift cards. Give cash instead.

Where to report a gift card scam.

If you discover that you’ve been a victim of a gift card scam as a purchaser, you should report it to the organizations that want to know about the crime. Here are a few places you can report the crime:

The store where you bought the gift card. They’ll want to know that thieves have targeted their store’s gift card center and are tampering with the products.
Local police. The local authorities will surely want to know thieves are operating in their area and may want to talk to stores about security ideas.
The gift card servicer. Look on the back of the card for a toll-free number and call the card provider.
The Federal Trade Commission. The FTC is the federal agency responsible for consumer protection against fraud. Visit their site and explore their services.

For more information on where to report scams, click here for the scam-reporting resource at WhatIsMyIPAddress.com.

Learn more about scams.

Chris Parker, CEO of WhatIsMyIPAddress.com, hosts the Easy Prey Podcast, which covers a full range of critical topics, including scams, fraud, and cybersecurity. If you click the link, you can search for a topic that interests you or browse the extensive list of past episodes. You can also find more resources in our Learning Center at WhatIsMyIPAddress.com, including articles, tools, and links to podcast transcripts and interviews.

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