New gift card fraud emerges as holiday scams are on the rise
Dec 11, 2024
HONOLULU (KHON2) - According to the the Better Business Bureau, gift cards are considered by many to be a popular and convenient gift-giving option – especially around the holidays.
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According to a new study from Capital One Shopping, 64 percent of U.S. consumers buy gift cards as holiday gifts. However, the BBB is warning shoppers that gift cards are also a target for scammers.
Cameron Nakashima from the BBB tells us a newer kind of gift card fraud has recently emerged, and it's called "gift card draining."
What the BBB sees is that gift card related fraud is on the rise – and "gift card draining" has changed the way we should approach gift card purchases.
Here's how the scheme works:
Criminals will go to a shop – usually a big box store – they'll tamper with gift card packaging to steal card information before it's sold. They return the altered cards to store shelves and regularly monitor the balances to check if the cards have been activated. Once you buy and load money onto the card, the criminal swiftly drains the funds, leaving you or your gift recipient with an empty gift card. The catch -- you usually only find out that your gift card has been drained when you go to use it.
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Nakashima says if your gift card has been drained do the following:
The first thing you should do is report the card to the card issuer immediately. Most issuers have toll-free telephone numbers you can call for support on the back of the card or online. This is usually not the normal customer service number for the store, but the store might still be able to help as a second option.
Next, report "gift card draining" to government agencies such as local authorities, the FTC, and even the Department of Homeland Security so they can track this criminal behavior.
Report it to watchdog tools such as the BBB Scam Tracker.
Nakashima also shares some tips to avoid before you become a victim:
If possible, buy gift cards online.
Buy them from stores that keep gift cards behind the counter or at the checkout stand where customers can't easily tamper with them or swap them out.
If that's not an option, look for signs of tampering – cuts, tears, bends, etc.
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Stick to stores you know and trust – don't buy from auction sites, third party online shops, or second-hand marketplaces. Only buy directly from sites and brands you know and trust. If you aren't familiar with a brand, you can look them up on BBB.org.