Holiday Scam: What Is Gift Card Draining Plus 4 Red Flags to Watch For
Written by
David Nadelle
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As Americans continue to slide through holiday mode, they’re going to get more calls, emails and texts for legitimate shopping deals. But they’re also increasingly going to be the targets of scammers, either directly or through their shopping and communication behaviors.
State and local governments, law enforcement officials and consumer advocate groups are warning holiday shoppers this year to be aware of a popular gift card scam that involves tampering before the card is purchased and emptied after activated or used.
“Gift card draining” involves criminals recording numbers and PINs from unpurchased gift cards, then placing them back in the packaging. These thieves then wait until the card is purchased and activated – finding that information online – and use the card until the balance is depleted, leaving the buyer with a worthless gift card.
Gift cards are remarkably popular as holiday gifts and with scammers because they’re easy for people to find and buy and they have fewer protections for buyers compared to some other payment options. They’re like cash — once the card is used, the money on it is gone.
How To Protect Yourself from a Gift Card Draining Scam
Criminals are always adapting to the times and are forever thinking of new ways to take advantage of vulnerable people. Here are some red flags to watch for when buying gift cards this holiday season and what to do if you’ve bought a card that has been compromised.
- Make sure your card is sealed and the protective cover and tape covering the PIN are intact.
- If you are buying a card that has no cover or seal, thoroughly check it for signs of tampering, such as scuff marks near the bar code or the back of the card. Also, check that the PIN number on the back isn’t showing.
- Avoid buying gift cards from online auction sites because they may be fake or stolen.
- Keep your store receipt in case the gift card you’ve purchased is later compromised. You can also take a picture of the gift card and store receipt. The number on the gift card and store receipt will help you file a report with store and gift card company if you lose the gift card or if you need to report fraud.
If you purchased a gift card that was used by a scammer, report it to the gift card company directly, request a freeze on the card and make sure to demand a refund. The Federal Trade Commission (FTC) has a list with most of the major gift card companies’ contact information here.
It’s also a good idea to notify the FTC also because, as it mentions on its site, “Every report makes a difference.”
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