July 17, 2024

In September 2022, a group of parents decided to celebrate their kids’ first-grade teacher’s birthday. “We all concluded that a gift was necessary,” Yolanda Bauza relayed to NBC 6. “She’s just amazing…the children adore her.”

The group surprised her with a personalized book filled with messages from each student and a $375 gift card bought at a local drugstore by Bauza.

“It felt fancier,” Bauza explained the choice of a VISA gift card over cash as it avails her the flexibility to spend anywhere.”

According to a receipt provided to NBC 6, the gift card was bought on Thursday, Sept. 8, 2022 at 6:30 p.m. The gifted card was handed over on the next day. By Saturday when the teacher attempted to use it, the funds had vanished.

“It was devastating,” expressed Bauza. “She texted me indicating that the funds had been used.”

Getty Images – A display of gift cards in a New York store.

Demystifying Gift Card Draining

As convenient as gift cards seem when it comes to gift-giving during the holidays, experts caution against purchasing from stands in retail outlets.

“This scam is sadly too frequent,” expressed John Breyault from National Consumers League to NBC 6.

Breyault detailed that scam artists record numbers off the back of gift cards in retail stores. They then utilize software to check the amounts loaded on these cards. They wait until a customer purchases and loads money onto the cards. They’re alerted and swiftly use the data to purchase items and drain the card.

Obtaining a refund in such cases is tricky as the rules on gift cards differ from those applied to credit card fraud.

“The protections that apply to credit and debit cards don’t extend to gift cards,” pointed out Breyault.

Both the teacher and Bauza reported the fraud to the issuing company but were unsuccessful in recouping the money until NBC 6 intervened. Subsequently, the teacher got a communication from the company and was reassured to receive a replacement card with $375.

Steering Clear of Gift Card Fraud

This unfortunate incident led Bauza to a vital realization about such scams. She confessed to being unlikely to purchase gift cards in the future. “It’s too soft a target for hackers,” she admitted.

Experts suggest purchasing gift cards online to ensure safety. If you opt to buy in-store, selecting well-sealed ones situated at the back or kept behind a counter may offer more security. Scrutinizing the card and its packaging for signs of tampering is also recommended. Breyault further suggests considering gifting cash instead.

Per a 2022 AARP survey, falling prey to such fraud isn’t uncommon, with 73 million adults in the U.S. having encountered gift card fraud. In 2022, gift card and reload card fraud resulted in $228 million losses, according to the Federal Trade Commission, as initially reported by TODAY.

Frequently Asked Questions

How common is gift card fraud?

Per a 2022 survey conducted by AARP, about 73 million adults in the U.S. have been victims of gift card fraud. The Federal Trade Commission states that in 2022 alone, gift card and reload card fraud amounted to $228 million in losses. This underlines the alarming prevalence of such scams.

What precautions can be taken when buying a gift card?

Experts suggest that the safest way to acquire gift cards is through online platforms. If they are to be bought in stores, it’s advisable to choose cards with intact packaging and preferably from an inaccessible area like the back of a rack or behind a counter. Also, a close examination of both the card and the packaging to detect tampering signs is recommended. Even cash gifts should be considered.

Are there protections for consumers victim to gift card fraud?

Unfortunately, the rules governing gift cards are different from those for credit and debit cards. Hence, retrieving money lost through gift card scams might not be as straightforward as lodging a fraud claim with a credit card company. This highlights the need for buyer caution when considering gift cards.