June 23, 2017

Gift Card Scam Robs Money from the Buyer and Receiver: Don’t be a Victim

Gift Card Scam Robs Money from the Buyer and Receiver: Don’t be a Victim

Criminals involved with latest gift card scam use modern technology to rob you of your hard-earned money. Learn the inner workings of this scam to avoid becoming a victim.

Well-intended consumers who buy gift cards beware: criminals have found a way to steal the money you load on these cards in the latest gift card scam.

Most of us are familiar with the gift card kiosks at places like grocery stores, where we can select gift cards from Nike, Best Buy, Amazon, eBay and numerous other retailers.

The process seems simple enough. We pick the gift card we want, take it to the cashier, and indicate how much money we want to load on the card. We then give the gift card to a friend or loved one for a special occasion, like a birthday, wedding or graduation.

But criminals involved with this scam have found a way to use modern technology to steal the money you’ve loaded onto the gift card – leaving both you and the receiver empty-handed.

This article takes an in-depth look at the gift card scam, including how it works, ways to avoid it, and what to do if you become a victim.

We’ve provided information from Scambusters.org and Fraudguides.com, as well as the Federal Bureau of Investigation.

We’ve also interviewed Detective Timothy Lohman, who solves forgery, fraud and financial crimes in Southern California. Detective Lohman worked a recent case in which a criminal spent about a year stealing money from victims’ gift cards.

Detective Lohman invited us to view evidence confiscated from the suspect’s residence, including meticulous log books, piles of stolen gift cards, and a piece of technology known as a reading, writing and scanning device.

The following example is based on a recent case solved by Detective Lohman, in which the scammer ended up in jail.

How the Gift Card Scam Works: A Recent Case Reveals Criminal Methods

Finding a gift card is easy these days, with many places like supermarkets offering a variety of gift cards on carousels inside their stores.

“As a consumer, we go to the store, find these cards on the carousel, and then say, ‘I’m going to get little Johnny a Nike gift card,’” Detective Lohman hypothesized. “So we get the card, take it up to the register, and tell them the amount that we want on the card. For example, with a Nike card, you can load $25 to $500.”

Once you give the clerk the money you want loaded on the gift card, you get a receipt.

“In order to make this card work, you can go to a retailer that will accept the Nike gift card and you buy your shoes or merchandise,” Detective Lohman said. “You provide the gift card as your form of payment like you would a debit card or credit card.”

Because gift cards work like credit cards or debit cards, each gift card has a number associated with it – typically around 16 digits long. Each gift card is also associated with a shorter PIN number, which is usually around three digits long.

“These numbers together – in a criminal’s hands – can take everything off of that card,” Detective Lohman said. “The $500 that you put on this Nike card, for instance, can be removed before you even have a chance to spend it.”

In Detective Lohman’s most recent case, the criminal went into a Vons in Southern California, where a carousel filled with gift cards was easy to access. The criminal simply walked in, grabbed a stack of gift cards, and took them home.

The criminal then logged every gift card number and its associated PIN number in a black book where he kept meticulous records.

“All the numbers, how is he getting those?” Detective Lohman asked. With a Nike gift card, for instance, the numbers were easy to access. “Nike has the numbers right out in the open – you can see the numbers through the card hole attached to the gift card.”

The PIN number on some gift cards appears to look protected with a silver strip, which is typically removed or “scratched off” by the merchant at the time of purchase. The purchase cannot be made without having both numbers together, and the PIN number was designed as an added measure of consumer protection.

However, “what the criminal does is he removes this strip because it’s like a tape,” Detective Lohman explained. “He’ll pull this off very gently. Why? So he can put the strip back on the gift card after he writes down the PIN number. When he puts that strip back, the consumer doesn’t see that the card has been tampered with.”

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