Gift card fraud is a big business, especially around the holiday season. According to the National Retail Federation, gift cards remain the most popular items on holiday wish lists for the 13th year in a row.
The serial number of a physical card can easily be recorded by someone using a handheld card reader, and the PIN scratch-off sticker can simply be replaced with an inexpensive decal available for purchase online. Thieves monitor gift card accounts via merchants’ online portals or customer service telephone numbers to determine when they are bought and activated. At this point they can easily encode the activated stolen data onto the magnetic strip of any card to make purchases, which they then often sell to make even more money. Cyber criminals also use automated bots, software robots or programs, to scan balances associated with gift cards and loyalty points in their quest to steal balances.
Security Best Practices
- Buy gift cards online directly from vendors instead of a third-party or, if purchasing a physical gift card, buy cards from behind the counter if possible.
- Examine gift cards for evidence of tampering: Is the PIN visible? Does it look like the scratch-off sticker may have been peeled off and replaced?Be attentive when paying to ensure the cashier does not activate a card then give you an inactive card. Verify the serial number on the card matches the receipt.
- Include the activation receipt with the gift card.
- Treat gift cards like cash.
- Don’t scratch the PINs until you’re ready to use or register them.
- Register cards with the merchant or add to an existing account.
- Use gift cards soon after you receive them.
- Check your unused gift card balances with the merchant periodically. If the balance is gone, report it immediately.
- Securely store your gift cards in your password-protected mobile wallet app if the merchant is affiliated with it. The merchant may require you download their app to redeem the card prior to adding it to your wallet.
- Beware of activation, transaction, and inactivity fees as well as expiration dates. Federal law requires that a gift card cannot expire for at least five years from the purchase date. Some states have longer terms.
- Though you won’t receive the entire amount of the gift card, unwanted cards can be sold to third-parties. Check with the Better Business Bureau to determine if the business is trustworthy.
And remember – anyone who demands payment with a gift card is a scammer!