It’s the most wonderful time of the year…for scam artists. When the shopping craze hits us after Thanksgiving, the thieves come out in droves and this year, they are targeting one of the biggest gift items we both give and receive – gift cards.
It’s a multi-million dollar industry, so it’s no surprise that scammers and con artists have put gift cards on their own wish list this year. And because of them, you could be in for a nasty surprise when you go to spend a gift card you received. In fact, your gift card could already be worthless.
That’s right, a gift card you have received or bought someone else could already have a zero balance. It’s a problem even U.S. Senator Charles Schumer is trying to warn people about.
Here’s how the thieves are picking your pocket without you even realizing it.
How the Gift Card Scam Works
Every gift card you buy has a magnetic strip on the back, similar to the one on your debit or credit card. This strip is basically there to record the running balance, the card number, and the PIN number if it has one.
The gift card thief has found a way to retrieve the information contained in that magnetic strip using a simple reader that can be bought very cheaply on the internet. The thief will then go to one of those racks filled with cards and read the information from them. Usually, they will target the cards with larger dollar amounts printed on them (even though they are not yet activated) as well as blank cards and lower denominations.
You may think that the packaging on the gift card can prevent that, but it’s no barrier. Most of the time the card can be lifted from the packaging, read, and replaced. Sometimes, the strip is visible in spite of the packaging. And many cards aren’t even placed into a wallet or gift card holder until after they’ve been activated.
Once the thief has the numbers, he/she waits patiently and checks the balances online. And it’s not long before those cards are activated in store by someone like you or me. Then the thief can use the gift card numbers to spend that money quickly, either online or in store, and run the balance down to zero. You, or most likely your gift recipient, won’t even realize it until weeks or months later. When the theft is noticed, it could not only be very embarrassing and frustrating, but also too late to do anything about it. The best chance you have to get your money back is as soon as the theft has occurred.
What Can You Do to Protect Yourself?
There are several steps you can take to make yourself less vulnerable to gift card scammers. Unfortunately, nothing is 100% fool proof (other than refusing to buy or receive, gift cards), but these tips should help you avoid their traps.
1. Carefully Examine Any Gift Card You Are About to Buy or Receive
When buying a card, be alert. Look for any obvious signs of tampering with the card holder, the scratch-off panel, the magnetic strip or any other wear and tear. Gift cards and the holders should be in pristine condition. If you see a PIN, put it back. The PIN should always be covered. When you receive a card, do the same thing, but be tactful; you don’t want to upset the person who just gave you a gift, so do it out of sight. If you see anything suspicious, it may be time to check that card out.
2. Don’t Buy Cards From Public Display Racks in Grocery or Retail Stores
The first place gift card scammers look is those big racks filled with cards. They aren’t protected or policed because they are not activated yet and thus are considered worthless. But those racks are easy picking for thieves, who can scan dozens of cards at one time.
3. Use Gift Cards Immediately
Don’t just pop them in the junk drawer until the day comes that you want something from that store. That just gives thieves plenty of time to use the card and leave you high and dry. Go and spend that money. You should also register your card online if you can. Most retailers have that option, and you can instantly see the balance and track your usage.