Throughout human history, one of life’s greatest riddles has been, “What do you get the person who has everything?” Well, a couple of decades ago, some enterprising retailers finally solved the riddle. With a gift card, redeemable for goods and services at your favourite establishment, you can pick your own gift and thank the giver later. Perfect, right?
As with every other new invention, it seems like shady individuals have just been waiting and pondering how to take advantage of it unscrupulously. Welcome to the brave new world of gift card scams.
Some features of gift cards make them irresistible to fraudsters. Unlike credit cards, they are anonymous. On the other hand they, or the networks their information are saved on, store real monetary value. And also unlike credit cards, the data security on gift cards is often a bit more lax.
So what are the scammers up to?
Some of these people simply walk up to a gift card display case at the local store, take a few cards to where they can discreetly copy the information on them (card number and security code), then quietly return them to the rack. They are able to use specialized software to determine when the card has been legitimately purchased and activated, at which point the criminal is able to use his stolen information to spend all the money on it.
Another scam that takes advantage of the relatively low levels of security protecting the data on gift cards is the automated bot attack. This is a “brute force” type of attack by which a computer logs into a card vendor’s online system and automatically tries numerous random card numbers and security codes in hopes of finding a winning combination. According to some estimates, upwards of 90% of logins to these websites are bot attacks.
For the less technically-inclined criminal, a more traditional con has been updated to take advantage of the anonymity of the stored value in the gift card. An innocent person gets a threatening call from someone purporting to be from the IRS, police, or some other frightening government agency. The “mark” will be told that hey have an outstanding debt that will lead to very serious consequences if it isn’t fixed immediately. Then the scammer gives the victim a quick and easy solution: they can make the problem go away if the victim goes to the store and buys enough gift cards to cover the “debt”. The unfortunate prey then gives the trickster the card numbers and security codes over the phone, and the scam is complete.
So what can you do to avoid becoming a victim? First of all, always make sure you buy your gift cards from authorized reputable dealers. If possible, it should be a card that was kept out of the hands of others (eg. not hanging on a checkout rack). If not, at least make sure there are no signs of tampering on the packaging. And finally, remember that nobody will ever demand to be paid in gift cards for any valid legal debt. If anyone does, hang up and report them to the authorities.