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Gift Card Fraud
Did you give a gift card this holiday season? Receive one from someone else? Odds are you did, as gift cards are becoming the gift of choice, taking away the risk of giving the wrong gift and offering the recipient the chance to purchase something they truly desire. However, like anything of value, scammers have developed ways to steal the funds stored on gift cards. These scams go undetected by the gift card giver, the recipient, and the store until the card is presented for payment, only to be found drained of its cash value and worthless.
How do crooks steal the value of gift cards? The techniques range from deceptively simple to exceedingly clever. The heart of these scams is the same however. Scammers steal the unique serial numbers from un-purchased gift cards in the store, either by using a magnetic strip scanner (an inexpensive and easy-to-hide piece of technology) or by copying the serial numbers by hand. The gift cards remain in the store, ready for purchase and activation. The scammer can easily check the balance online or by phone until the cards are activated and fully charged- ready for fraudulent use before the recipient has even received the gift card. Even if a PIN is required when checking a gift card balance, this serves as little deterrent as the PINs themselves are generally listed on the back of the card and stolen just as easily. Other variations on gift card scams involve low tech methods such as swapping blank gift cards (stolen on previous trips) with real gift cards- the card's packaging retains the real gift card's information so that the real card is loaded with the funds when purchased, leaving the purchaser with a useless card and the scammer with a fully charged one.
Gift card scams often occur through online auction websites where thieves are selling used, counterfeit, and fraudulent gift cards. Scammers will often overstate the value of the gift card that they are selling so the buyers do not get what they think they are purchasing. The scammers may also use stolen credit card information to buy gift cards and then selling these gift cards for cash, either at online auction sites or elsewhere.
The best protection against this kind of fraud is prevention. It is not advisable to purchase gift cards from online auction sites. Of course, some of these cards are real, but many are stolen, counterfeit, or used. If purchasing a gift card in store, ask for one stored behind the counter or out of public reach. Carefully examine the card for signs of tampering, such as exposed PIN or broken packaging. At the time of purchase, have the cashier scan the gift card in front of you so you know that the card is valid and loaded with the correct funds. Keep your receipt and, if possible, register the gift card with the store's website- many stores will replace the card if you report the fraud quickly and have your original receipt.
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