Tips to help avoid gift card fraud

For many consumers, purchasing a gift card takes the stress out of finding the perfect gift to give. First introduced in the 1990s, gift cards have continued to gain in popularity. It is expected about $130 billion worth of gift cards will be purchased by the end of 2018.

While they are a popular gift, crooks are finding ways to steal the money before the intended recipient has a chance to spend it, said Cindy Clampet, Oklahoma State University Cooperative Extension family resource management assistant specialist.

“Gift cards are a big target for criminals and there are various ways in which consumers are scammed out of their money,” Clampet said.

The simplest method involves a scam artist taking a gift card from the rack in a store, writing down the number and scratching off the strip to reveal the security code. Once he has that information, the hacker puts a replacement strip, which are easily available online, over the code and puts it back on the rack.

Later, the unsuspecting consumer purchases the card and loads money onto it. Once the card is loaded, the hacker periodically goes online to check the balance of the card. Once it is loaded, the scammer gets busy shopping.

“Unfortunately, consumers don’t even know the card has been hacked until the recipient tries to use it,” she said. “One way to help safeguard your gift card purchase is to pull a card from the middle of the rack. Don’t take the first one on the rack. Inspect it closely, especially the area to be scratched off to reveal the security code. If it looks like it has been tampered with, choose another card. Or look for gift cards that are kept behind the counter or are in a well-sealed package.”

Another tip to avoid being scammed is to change the security code as soon as you buy the card. Clampet said to register the card when you get home and change the PIN. Also, suggest the recipient use the card as soon as possible.

Another way sophisticated hackers steal your gift card dollars is by using robot networks, also known as botnets. Botnets test millions of combinations of gift card account numbers and stolen PIN passwords to try to log into online gift card accounts that have money loaded onto them. The botnets avoid detection by mimicking individual human browsing behavior and blending in with a website’s genuine visitor traffic.

“Criminals also can gain access to your gift card numbers and PINs by hacking your computer. To help prevent that, make sure your security software is the most up-to-date version,” she said. “Create and use strong passwords to help protect your privacy. Also, consider purchasing gift cards online directly from the retailer.”

Although the gift card industry continually is seeing an increase in purchases, many of them go unused. Of the estimated $130 million spent on gift cards last year, about $1 billion went unspent.

“Fortunately, it has become harder for retailers to make money on out-of-date cards. The Credit Card Accountability, Responsibility and Disclosure Act of 2009 ruled they should not expire until five years after the cards are issued,” Clampet said. “However, if you purchase a gift card from a smaller retailer, only about half of those businesses still will be around in five years. So, before you turn to the gift card as the perfect gift for those who are hard to buy for, make sure it’s to a store at which the recipient shops. You don’t want to waste your money for a gift that won’t be used.”