It's one of the most sought after gifts until recipients realize it's worthless. Scammers are finding ways to drain gift card balances right after they're activated.
Alexis Cruz wanted to surprise a family member with a $100 gift card. She picked one off the rack at her local Target and took it home.
“Opened the card so I could put it in a birthday card, only to find that the last four digits of the card number had been scratched off,” said Cruz. “And then you flip it over, there's no CVV code, and you can actually kind of see some discoloration there where they have either scratched it off or put white out. All of this gray that you're seeing is glue.”
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The culprit made it so she couldn’t use the gift card in-person or online.
“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."
She alerted Target customer service and tried calling Visa.
“I’m out $100. That's not the end of the world, right, but it's the Christmas season. There are going to be families that are purchasing hundreds of dollars’ worth of gift cards. What about the single parents or the families with five or six kids that thought they were giving their kids a good Christmas and have now lost all that money?” Cruz wondered.
Last year, consumers reported losing $217 million dollars in gift card fraud, according to the Federal Trade Commission. Retailers are trying to combat it with consumer awareness and secure packaging, but Maryland is now making it mandatory with a new law that passed this year.
"It will provide consumers with signage to keep this top of mind and as a reminder for them when they're shopping to think and look for any sort of tampering with packages," said Cailey Locklair, president of the Maryland Retailers Alliance. "Secondly, when they go to check out with one of our employees, that employee will be mandated to have training around this, so that employee will also be looking for tampering or anything indicating fraud with that gift card. And then finally, and this is the biggest part of the bill, is secure packaging requirements were mandated in the law, so it's really going to change some of these cards that have been in question."
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The law doesn't take effect until October of next year and consumers will still need to look for signs of tampering.
“Look for any strange kind of rips or tears. Make sure it's aligned properly,” said Locklair. “Especially the redemption information, so that pin should be covered on the back of that card.”
And she strongly urges shoppers to keep their receipt.
“We want consumers to shop with us. We want them to feel safe purchasing these gift cards for their families, not only at the holidays, but year-round, and [retailers] will continue to go ahead and roll out new security protocols to keep up with those fraudsters,” Locklair said.
Scripps News Baltimore's Mallory Sofastaii contacted Target and a spokesperson said they were able to replace Cruz’s gift card. Target is also redesigning their gift cards to prevent fraud.
Target GiftCards will no longer include a printed security code. Instead, Target GiftCards sold in store will have a blank space where these codes used to be. At checkout, a team member will apply a security access label to the gift card, reducing the potential for fraud.
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When shopping for a gift card this holiday season, shoppers may want to pick one from the middle or towards the back of the rack. Buy one that's kept behind the counter. Send an online gift card instead and use a credit card when buying a gift card in case you need to dispute the transaction.
Card draining is just one scam when it comes to gift cards. Scammers will also request them as a kind of payment because they can quickly steal the balance and it's not reversible. Click here for additional information on how to avoid gift card scams.
This story was originally published by Mallory Sofastaii at Scripps News Baltimore.
