Gift cards are big business, whether you are buying them for a friend, relative or you happen to be receiving one. The great thing about a gift card is that it takes the hassle out of shopping for the perfect present. While for the receiver, a gift card for your favourite store is, for many, just as good as receiving the perfect birthday or Christmas present. However, there also lies a darker side that could see you be robbed of your credit in broad daylight if you're not aware of the scams that exist.
Gift cards are effectively money guaranteed up to a certain value at a certain store or group of stores. Yet the way in which the money is stored on the card and the decreased level of security that gift cards provide can make your credit more easily accessible to scammers. I want to give you a scenario of how fraudsters are stealing money right from under owner's noses. Plus, I will also tell you the best tips to avoid being burgled in this way.
The Gift Card Scam
Scammers have found a way to steal gift card balances. If you buy them from a display rack that has various store gift cards available, you could become a victim of theft.
Fraudsters now have a method of recording card numbers and magnetic strip serial numbers. Once this data is recorded they can call into the store a few days later to check the balance of the card. They'll keep this up until they're informed that the card has been activated, after which they go online and start shopping with the card number they originally noted down to start spending your money.
How the Scam Works
A scammers process is usually to visit stores which have large racks of gift cards and using a small, inexpensive mag-strip scanner they scan each unique gift card serial number.
The scam can be conducted by either noting down the card number or by scanning the magnetic strip (or "mag-strip) serial number. The mag-strip scanner method is more technical but much faster.
Gift cards will sometimes have packaging covering the necessary parts so be wary of a card which feels loose within its packaging as it may have been tampered with by a scammer. Once the fraudster has completed his rounds of stealing sensitive gift card information its your turn to walk in and buy a card with your hard earned money.
Now the scene is set. All the scammer has to do is call into the store every couple of days to check the balance of the card. Most stores do not require a password so it’s easy to receive the information if the card details are provided. If you buy a card with a PIN you’re not necessarily safer because this information can also be collected via the magnetic strip scanner.
The reason this is such as easy scam is because thieves know that gift cards are bought in advance of a birthday or Christmas, so usually cards lie fully charged for a number of days or even weeks before gifted.
The Australian gift card market witnesses over $2 billion being spent every year making it a huge attraction for criminals. Besides the above-mentioned scam the industry also deals with other criminal activities such as:
- Fake gift cards being sold on auction websites
- Auction websites overstating the value of their gift cards
- Scammers using stolen credit card information to buy gifts cards and then sell them online
Tips to protect against gift card scams
- Only buy gift cards directly from retailer stores: Ensure you buy from the store you intend to use it, otherwise only purchase online when its from the retailers secure website.
- Do not buy from online auction websites: Not all auction websites sell fraudulent gift cards, but why take the risk when so many do.
- Always examine the packaging: If a card is showing its PIN or looks slight miss-positioned within it’s a packaging pick another one.
- Avoid buying from public racks: Public racks are prime targets, but also be wary of racks inside stores because staff involved have been caught out.
- Request that the cashier scan the card in front of you: This will certify that the card has been charged with the amount you have just paid and will prevent you from being given a worthless defrauded card.
- Save purchase receipts until all money is spent: Retailers can track gift card purchase locations as well as where it was used. If you have your receipt they can generally replace it for you.
- Never give personal information when buying: Never provide driving license, passport or any other kinds of information like this when buying a gift card. Its not required.
- Wherever possible, register your card on the retailers website: Not all store’s websites have this feature but for the ones that do it’s a great way to be notified of gift card usage.