Common Gift Card Scams

Gift Card Scams

Gift card draining is one of the most popular tactics currently being used by fraudsters. The scheme often begins with fraudsters stealing gift card numbers from gift card displays at retailers. They will disguise any evidence of tampering and patiently wait in the background for those gift cards to be loaded and activated.

Additionally, once fraudsters have obtained numerical sequences of some physical gift card numbers, they may use botnets to perform brute force attacks on gift card websites by conducting what is referred to as “sequencing” to test thousands of card numbers and PIN combinations per minute.

Bots or individuals recruited, working in sweatshops are constantly checking card balances on confirmed card numbers and once balances are available, the gift card will be redeemed by the fraudster and the gift card you gifted (or received) is now worthless.

Not too long ago, a local Washington resident was arrested for gift card draining. In August 2024, the local tv station, KIRO reported that Lynnwood Police Department had arrested a local resident for orchestrating a gift card scheme where consumers lost approximately $100,000. You can read the full story here.

One big box retailer, Target, has updated their procedures and redesigned their physical gift cards to reduce the risk of tampering. While traditional gift cards have access codes printed on the back, which provides fraudsters with the motive to steal these codes before they’re sold (then drain the card after they’re purchased), all Target gift cards sold in Target stores will have a blank space where these codes used to be. At checkout, a team member will apply a security access label, (secured at checkout) to the gift card, reducing the potential for fraud. Kudos to Target for taking action to update their processes to stop fraud. If you’d like to read more, visit these articles:

• Target – Preventing Scams
• Target Launches Redesigned Gift Cards to Fight Fraud Following New Md. Legislation.

Tips to Avoid Being a Victim

• Reduce your chances of being a victim and purchase gift cards online.
• If you do purchase a physical gift card, stick to stores you know and trust.
• Never purchase from online auction sites because the gift cards may be fake or stolen.
• Inspect the gift card for tampering before you make the purchase. Some things to look for include:
  • Evidence of tears in the zigzag cuts round the perimeter of the pack or visible paper fibers around borders where a sharp knife may have cut through the edges allowing access.
  • Evidence of tears or exposed nicks along the pull tab or a pull tab that looks compromised.
  • The PIN cover has missing pieces, is fully missing, is not flat/smooth and may contain wrinkles. The packaging or PIN covering deviates from the standard gift card packaging. Compare the packaging and PIN to others on the shelf.
• Keep a copy of the gift card and store receipt. The number on the gift card and store receipt will help you file a report with the gift card company (info available on the back of the card) or if you need to report fraud. Reporting of Gift Card Fraud should be submitted to the Federal Trade Commission.