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"Essentially, I Just Handed a Scammer $100: The Impact of Gift Card Fraud on Shoppers and Retailers"
As the holiday season approaches, shoppers should be cautious when selecting gift cards. It's advisable to choose cards from the middle or back of the display rack, as scammers have devised ways to drain their balances shortly after activation.
Gift cards are a popular choice for presents until recipients discover they've been rendered worthless. Scammers are increasingly targeting these cards, exploiting vulnerabilities in their purchase process.
Alexis Cruz recently experienced this firsthand while trying to surprise a family member with a $100 gift card from her local store. Upon opening the card to include it in a birthday greeting, she noticed that the last four digits of the card number had been scratched off.
“I couldn't tell that this thing had been tampered with at all,” Cruz said. “Essentially, I just gifted a scammer $100 without even knowing it.”
The removal of identifying information made it impossible for her to use the card either in-store or online. Frustrated, Cruz contacted customer service but was left feeling defeated over her loss.
“I’m out $100. That's not the end of the world, right? But it's Christmas season. There are families purchasing hundreds of dollars’ worth of gift cards. What about single parents or families with five or six kids who thought they were giving their children a good Christmas and have now lost all that money?” Cruz questioned.
According to reports from the Federal Trade Commission, consumers lost an alarming $217 million to gift card fraud last year alone. In response, retailers are ramping up efforts through consumer education and enhanced packaging solutions. Maryland has enacted new legislation mandating stricter protections against gift card fraud.
"It will provide consumers with signage to keep this top of mind and as a reminder for them when they're shopping," said Cailey Locklair, president of the Maryland Retailers Alliance. "Employees will be trained to look for signs of tampering and fraud concerning gift cards. Additionally, secure packaging requirements have been mandated by law."
The new law will come into effect in October next year; however, consumers must remain vigilant for signs of tampering in the meantime.
“Look for any strange rips or tears and ensure everything is aligned correctly,” Locklair advised. “The pin should always be covered on the back of that card.”
She also emphasized keeping receipts as an essential precautionary measure.
“We want consumers to feel safe purchasing these gift cards not only during holidays but year-round," Locklair added. "Retailers will continue rolling out security protocols to combat fraud.”
Cruz's situation took a positive turn when Target replaced her compromised gift card after being contacted by news reporters about her experience. In an effort to mitigate future fraud attempts, Target is redesigning its gift cards; they will no longer feature printed security codes but will instead include blank spaces where codes used to appear. A team member will apply security labels at checkout, reducing potential risks further.
This holiday season, shoppers should consider buying gift cards located deeper within racks or those kept behind counters for added security. Opting for online gift cards can also provide additional safety measures as can using credit cards for purchases in case disputes arise later on.
Gift card scams extend beyond balance draining; scammers often request payment via gift cards because they can swiftly steal funds without recourse for recovery.