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Watch For Scams Newsletter. Gift Card Scam
November 08, 2011

Gift Card Scam

Watch For Scams is dedicated to helping you avoid becoming a victim of fraud.

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Gift Card Scam

The cards are attractive targets for fraud because, unlike credit or debit cards, there's no identifying name attached to them - only strings of numbers.

Most commonly, thieves case racks of gift cards in stores, writing down the identifying numbers or using a scanner to lift information from their magnetic strips.

Armed with the data, they head home to their computers and wait for customers to buy the cards. They repeatedly check websites that display gift card balances, which tell them when the card is activated. As soon as it's activated, they spend the balance in an online shopping spree.

In a more sophisticated variation of the scam, the thieves also steal a blank card to create a counterfeit card they can use in a store as well as online. In both cases, customers often don't find out their gift is null and void until the intended recipient receives it, weeks or months after the original purchase.

The scams are possible because most retailers simply don't package their gift cards well enough to conceal the identifying numbers And while the greatest risk lies with so-called "closed-loop" cards that can only be used at a single store such as Target or Best Buy, thieves can also target "open-loop" cards issued by credit card companies. They swap activation stickers attached to the outside packaging, so that a consumer buys one card but activates the one possessed by the scam artists.

Other scammers target consumers who buy gift cards from online exchanges such as PlasticJungle or auction sites such as eBay.

Some thieves try writing down their card's numeric identifiers, selling the card to the discount website and then racing to spend the card's balance before a new buyer has the chance to do so.

Tips for avoiding gift cards scams

Don't buy gift cards displayed prominently within the store. Ask sales clerks to sell you cards from the back room or behind the customer service desk

Examine cards and packaging for signs of tampering. Don't buy a card where the coating covering the PIN number has been scratched away or the activation sticker isn't firmly affixed

Spend the gift card as soon as possible. Don't put the card in a drawer for months. The longer consumers take to spend their gift cards, the more time thieves have to do it for them

Beware of online exchanges and auction sites. The Federal Trade Commission advise against buying cards from online exchanges or auction sites because of the possibility of buying stolen cards. Instead, buy cards directly from retailers

Remember - always watch for scams!


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