The latest Gift Card scam involves people going to grocery stores, pharmacies, and other retail outlets, finding the Gift Card section, peeling the packaging aside and writing down the card number, the security code, and expiration date to use once they find out that card has been activated. Here we will explain how this scam works.
Gift Cards work in a manner similar to regular Credit Cards. These gift Credit Cards have a 16-digit card number, an expiration date, and a 3-digit security code (CVN). The balance of the card is maintained by the credit card company’s authorization system and referenced by the card number which is printed on the card and stored on the magnetic strip.
Therefore you can make purchases using these Gift Cards either by swiping the card’s magnetic strip through a checkout machine or by providing the card number, expiration date, and security code directly to a retailer either on online or over the phone.
Since there is no name associated with a gift card they could be used by anyone with the card number, expiration date, and security code. There is no way of validating a Gift Card transaction against a person’s name or identity.
Now imagine that a scam artist walks into your local grocery store, grabs a stack of gift cards off the rack, and then one-by-one peels the packaging aside to reveal the gift card number, expiration date, and security code. He writes this information down and leaves with a list containing info on over 30 Gift Cards.
Most gift cards are worthless and contain no value until they are sold. Some Gift Cards require activation which involves scratching off an activation code from the back of the Gift Card and calling a 1-800 number to activate the card using this code.
Since this code needs to be scratched off it is relatively protected from people getting the number before the card is purchased.
However, this scam artist can simply wait a few days after writing down the card information and then go to a website like GiftCards.com and use their Gift Card Balance Checker to see if the card has been activated yet.
Once they see that this card has an active balance. They are able to use the card to make online or over the phone purchases using this card information. They will also be able to know the balance on the card and are able to return to this site to check the balance in the future.
Since most gift cards aren’t given to the recipients until their birthday or Christmas, the scam artist will have plenty of time to use these cards. Most gift cards are not used until at least 30 days after they are purchased. This gives the scam artist a large window of opportunity to spend the money before the recipient.
There is no name associated with the gift card so the credit card companies cannot treat this type of theft in the same manner as they would treat regular Credit Card theft. The receipient usually is not the same person as the one who purchased the card so there is no way of associating an identity to the card and the receipient (since they didn’t purchase this card) is also less likely to complain about their balance disappearing.
To protect yourself from this kind of theft, you may want to purchase your card from a customer service person, where they do not have the gift cards viewable to the public and always keep track of your gift card balances.