Drained by scammers: Is enough being done to protect consumers from gift card fraud?

WEST JORDAN – Buying gas is tough on anyone’s wallet, but Joel and Marie Gurr have a hack to save money: They buy gift cards from Smith’s for the fuel points. 

“They’ll have their 4X fuel points for the weekend, or there are extra fuel points if you buy a certain (gift) card,” said Marie Gurr. 

“We like the additional dollar off per gallon of gas,” Joel Gurr said. 

Who doesn’t? But here’s what Marie and Joel really, really don’t like: when they buy a gift card, go to use it, and find out it’s drained. There is no money on it. 

“They have been tampered with,” said Joel Gurr, “making them invalid for us to use.” 

The Gurrs say it has happened to them three times now, each time with cards they bought at the same Smith’s store. The first two stung – two Apple Gift Cards valued at $25 each. But the third one, a $100 Amazon gift card, really hurt. 

“That’s what really got me,” said Joel Gurr. “I’ve got to do something about this.” 

Refund refusal 

That something was going to Smith’s for a refund, but the Gurrs say the store’s manager refused. 

“She did indicate that they are aware that there is a problem, but their hands are tied because the retailers have to have them display the cards a certain way and so there’s no liability,” said Joel Gurr. 

The Gurrs didn’t fare any better with Amazon. In an e-mail, the e-tailing giant told them, “The card was already used on another Amazon account and cannot be refunded.” 

“We’re just on this end buying gift cards trying to get our fuel points and then we can’t redeem them and nobody’s taking responsibility,” said Marie Gurr. “The store says there’s nothing they can do. We contact the retailer. They say there’s nothing they can do. So, we’re stuck. We’ve just lost the money, and nothing’s being done to prevent the tampering.” 

A common experience

The thing is, the Gurrs’ experience is pretty common. A recent AARP survey found close to one-in-four people have either bought or received a drained gift card. And 54% of those who tried to recoup missing funds could not. 

The issue has impacted so many people that lawmakers in some states are forcing protections the industry has not. For example, starting next summer, Maryland will require gift cards be sealed in tamper-proof packaging that hides any information that could be used for activation. 

“No business really wants their gift card to be compromised in this way,” said Shelley Hunter, a gift card expert with GiftCardReform.com “But they’re not doing enough to stop it and to protect consumers from that.” 

For years, Hunter has advocated for stronger security measures. She says companies really don’t want to have to compensate customers for drained gift cards. 

“So, the grocery store – they can activate the card, but they really can’t check the balance,” she said. “The merchant can check the balance, but they didn’t sell you the card or have any way to verify that you bought it from them.” 

How does draining happen? 

So, how are thieves draining those balances? 

Often, they swipe the gift card from the store, take it somewhere else, unseal it, copy down the card number and PIN, reseal it and bring it back to the store. Then, the bad guy monitors the card, waiting for it to be bought and activated. Then, he can steal the money before it can be used. 

Evidence of tampering includes scratched-off numbers or extra glue. But that evidence may not be so easy to spot. 

“Scammers are so good at tampering with the cards that it’s not easy to detect,” said Hunter. “You’re not going to know there’s a problem until you open up that card. And you won’t know even that is going to happen until you give the card to the person you’re planning to give it to.” 

How to get refunded 

Hunter says if the store doesn’t refund you for a drained card, go to the brand on the gift card. 

“It’s their brand that consumers are going to be frustrated with,” Hunter said. “I think they’re the ones that could drive a solution.” 

If neither the brand nor the store is willing to help make you whole, Hunter suggests contacting the company that manufactured the gifts. Incomm Payments and Blackhawk Network are two of the nation’s leading gift card makers. The two companies alone supply hundreds of major name-brand gift cards. 

But no matter who you work with on a resolution, you’re going to need documentation. 

“You do need to hold on to your receipt as proof of purchase,” Hunter said. “If there’s some packaging, it’s a good idea to hold on to that. And use the gift card right away, if possible.” 

Joel and Marie Gurr refused to give up on recouping their money. 

“The more they do nothing about it, the more it will entitle those thieves to continue to make it a bigger problem and to take money out of consumer’s pockets,” said Joel Gurr. 

Smith’s did eventually refund them the $100. 

A Smith’s spokesperson told us that “Smith’s processes hundreds of gift card transactions daily, and fraud incidents are rare.” The spokesperson also said the store is “working with other retailers and card suppliers to improve tamper-evident packaging and encouraging brands represented on the cards to do the same.” 

That’s something the Gurrs say is long overdue. 

“So, we as customers just are at our own risk,” said Marie Gurr. 

Protecting yourself 

To protect yourself, avoid purchasing gift cards where the number or a bar code is plainly visible. Even if they have a silver scratch-off label covering the PIN or other codes, just know that label can easily be removed and replaced. 

A safer option is a gift card sealed in packaging concealing any information that could be used to drain funds. Some also have hologram tape on the package that if broken would indicate the package has been tampered with. 

An even better option may be a card that isn’t on the rack at all. Some stores are putting up only display copies of gift cards on their racks that ask people to bring the display copy to a cashier to exchange for an actual gift certificate.