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The City of New Orleans

Mayor Mitchell J. Landrieu

Gift Card Fraud

December 18, 2013

The Holiday Season is increasingly popular for gift cards.  For retailers, a gift card purchase ensures the holder will eventually purchase merchandise from their store, securing future sales. Gift cards have a unique number recorded in a magnetic strip that is used to track usage and outstanding balances.  However, the holiday season provides more opportunities for fraud to occur.

 

Examples of Gift Card Fraud

 

• Employees at stores where gift cards are sold steal them from their displays, activate them with store scanners and then go on shopping sprees.

• Thieves pretending to be customers swap blanks (previously stolen) for new cards activated by clerks during a sale, then change their minds and cancel their purchases. The clerks think they have gotten the new cards back while the thief actually walks away with the new card.

• A thief may have a small, inexpensive mag-stripe scanner in their possession. This scanner can easily read and store unique gift card serial numbers.

• Used, counterfeit and fraudulent gift cards are sometimes sold on auction websites. Sellers overstate the value of the gift cards and the buyers don’t receive what they think they are purchasing.

 

Tips for avoiding gift cards scams

  • The Federal Trade Commission recommends buying gift cards from the original retailer. Avoid purchases from any third party such as online auctions, a flea market or outside a physical retail store. Check to make sure the cards haven’t been tampered with and that no PIN numbers are exposed. This maybe a sign that scammers may have scratched off the package’s protective coating.
    • If you’re on the receiving end of a gift card this holiday, immediately register it online and hold on to the receipt. Receipts can confirm the value of the gift card as well as its date of issuance and date of expiration.  Receipts also prevent loss when magnetic strips fail. Be sure to continue to request receipts when making incremental purchases and maintaining a gift card balance.

 

  • Spend the gift card as soon as possible. Don't put the card in a drawer for months. The longer consumers take to spend their gift cards, the more time thieves have to do it for them. Thieves jot down the numbers displayed on the cards, then periodically check to see what the balance is on the card. They then use the numbers to make online purchases.

  

Thank you,

Sergeant L. J. Smith

New Orleans Police Department

Commander, Crime Prevention Unit

715 S. Broad Avenue, Office # A- 412

New Orleans, LA 70119

(504) 658-5590 – Office Phone

Sylbrown@nola.gov - Email

 
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Last updated: 12/20/2013 3:52:47 PM

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