Financial Wellness
Buying Gift Cards Off the Rack Can Be Risky
Gift cards are a nice gift idea, especially if you choose one that fits the recipient's interests, shopping, and dining preferences. And they're convenient to buy, with many stores having large racks of multiple gift cards to select from.
Another survey by AARP found that 73 million U.S. adults have experienced some form of gift card fraud, with about one-quarter of consumers saying they have either given or received depleted gift cards.
Even worse, more than half were unable to obtain a credit or refund for the missing balance. And, one in four adults surveyed said they bought gift cards solely to pay what turned out to be a false and fraudulent debt, bill, or fee.
Then, Stokes says, the scammers set up a computer program with an algorithm that follows those cards. When one is purchased at a register for activation, the criminal is alerted by the program, and they are able to drain the funds off of that card before you or the card recipient can use the card.
Don't buy the first card on the rack. Instead, pull off the first few cards and take one closer to the back. The reasoning is that the cards in front are the ones most easily tampered with. It's less likely that the scammer will reach for the cards in the back since they would have to remove a bunch of them first which may attract attention. It's also best to buy gift cards that are close to or in eyesight of the cashier or security cameras.
Check the card for tampering. Look for wrinkles or tears in the gift card packaging, stickers that look like they've been removed and then replaced. Also be sure to double-check that the PIN code is not exposed.
Whenever possible, choose gift cards that are sealed inside a full paper or cardboard sleeve. For example, Apple (and many other retailers) often package their gift cards in rigid, box-style cardboard sleeves that include a barcode on the outside. Inside the sleeve, the actual gift card has its own separate barcode—this way, both the cashier and you can visibly verify that the outer packaging and the card inside match before purchase.
Confirm the balance and hold on to your receipt. Be sure the cashier gives you a card activation receipt and check to make sure the number on the gift card matches the number on the receipt. Hold on to your receipt, in case you experience a problem when you use the card.
Use the card right away. Often, we put gift cards away in a drawer and wait to use them; however, the more time that passes the more time the scammers have to manipulate the card. Plus, you're less likely to get a refund or assistance if there's a problem when you don't use it right away.
Register the gift card. Some retailers like Target and Starbucks allow you to register your gift for security and convenience, and you can track the funds on it.
Buy gift cards online. Buying an electronic gift card from a reputable retailer online can help you avoid physical card tampering.
The FTC has a list of contact information for gift card companies through which you can talk to a representative.
You may not get your money back, but it's worth a try. If nothing else, your call may alert the retailer that they need to increase their security practices and could save someone else from becoming a victim.
Rack gift cards scams are on the rise
Unfortunately, gifts card off the rack are also a common tool for scammers. In fact, the Federal Trade Commission (FTC) reported that in 2021, gift card fraud resulted in $148 million stolen from consumers.Another survey by AARP found that 73 million U.S. adults have experienced some form of gift card fraud, with about one-quarter of consumers saying they have either given or received depleted gift cards.
Even worse, more than half were unable to obtain a credit or refund for the missing balance. And, one in four adults surveyed said they bought gift cards solely to pay what turned out to be a false and fraudulent debt, bill, or fee.
How the scam works
According to Kathy Stokes, director of AARP's fraud prevention programs, the rack gift card scheme usually goes like this: Scammers target store display racks of gift cards, especially those out of sight of cashiers or pharmacy counters. They will then tamper with the packaging and remove the film strip on back, recording the gift card number and PIN, and then re-stick the film strip back so it looks untouched. Some even use fake barcode stickers to cover up the gift card's real barcode.Then, Stokes says, the scammers set up a computer program with an algorithm that follows those cards. When one is purchased at a register for activation, the criminal is alerted by the program, and they are able to drain the funds off of that card before you or the card recipient can use the card.
How to avoid the scam
To help avoid getting scammed, experts suggest following these tips:Don't buy the first card on the rack. Instead, pull off the first few cards and take one closer to the back. The reasoning is that the cards in front are the ones most easily tampered with. It's less likely that the scammer will reach for the cards in the back since they would have to remove a bunch of them first which may attract attention. It's also best to buy gift cards that are close to or in eyesight of the cashier or security cameras.
Check the card for tampering. Look for wrinkles or tears in the gift card packaging, stickers that look like they've been removed and then replaced. Also be sure to double-check that the PIN code is not exposed.
Whenever possible, choose gift cards that are sealed inside a full paper or cardboard sleeve. For example, Apple (and many other retailers) often package their gift cards in rigid, box-style cardboard sleeves that include a barcode on the outside. Inside the sleeve, the actual gift card has its own separate barcode—this way, both the cashier and you can visibly verify that the outer packaging and the card inside match before purchase.
Confirm the balance and hold on to your receipt. Be sure the cashier gives you a card activation receipt and check to make sure the number on the gift card matches the number on the receipt. Hold on to your receipt, in case you experience a problem when you use the card.
Use the card right away. Often, we put gift cards away in a drawer and wait to use them; however, the more time that passes the more time the scammers have to manipulate the card. Plus, you're less likely to get a refund or assistance if there's a problem when you don't use it right away.
Register the gift card. Some retailers like Target and Starbucks allow you to register your gift for security and convenience, and you can track the funds on it.
Buy gift cards online. Buying an electronic gift card from a reputable retailer online can help you avoid physical card tampering.
What to do if you are scammed
If you believe you are a victim of gift card fraud, call the retailer where you purchased it from immediately, and also the company that issued the card. Have your receipt in hand.The FTC has a list of contact information for gift card companies through which you can talk to a representative.
You may not get your money back, but it's worth a try. If nothing else, your call may alert the retailer that they need to increase their security practices and could save someone else from becoming a victim.
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Knock out your gift shopping list in no time with Visa gift cards, available for purchase in any Tower branch. Our gift cards are kept safely behind the teller counter until you buy them, so they are secure. The gift cards are available in any amount from $10 to $500, so they fit any budget. There is a small fee of $3.95 per gift card, and the cards are only valid in the U.S.Resources: Association for the Advancement of Retired People (AARP), Huffington Post, Federal Trade Commission
