I got this question from a Facebook friend. It’s a great question considering we’re about the enter the holiday shopping season. If you have a question for me please submit it to me via Facebook or Twitter @johnulzheimer.
Q: Hey John, Is there anything I should be aware of when I’m shopping for gift cards this holiday season? I love gift cards. I give everyone gift cards for Christmas. It seems like there’s a scam for everything. Is there one for gift cards as well?
A: Gift cards remain one of the most popular, if not THE most popular, gift given and requested during the holiday shopping season. Most people think it’s a safe and secure product, and to some extent, it is. But, thieves are very clever and have found a way to rip off gift card purchasers. I’ve called this the “front of the rack” scam. Here’s how it’s supposed to work…
You can go to any local grocery store and buy any one of dozens of gift cards for restaurants and other retailers. You take the card to the register and pay to have some specific amount loaded onto the card. Then you give the card as a gift, recipient opens and loves the gift…and all is well.
Here’s the scam…
Thief goes to the same grocery store and takes an empty gift card off the rack. They know the card hanging in the front of the rack will be the next one picked out by a shopper, so they choose that one. Then the thief writes down the gift card number off the back of the card. If the card’s number is covered by that material that must be scratched off by a coin, they’ll do so to expose the number knowing most consumer’s don’t check the back of a gift card when purchasing it.
The thief waits a few weeks after writing down the number knowing that by then the card has been sold and loaded with some value. They call the customer service of the gift card issuer (the number on the back of the card) and finds out how much value is left on the card. This is how they know the card has been sold and has value. Once they know this they can replicate the value onto a clone card and then spent it. The card is still given to someone for Christmas and then the recipient eventually finds out the card has no value because it has already been used by the thief. This is weeks, if not months later.
How do you avoid this scam? You choose a card off the back of the rack or ask the clerk for a card that hasn’t been placed on the display yet.
Credit Reporting Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. Follow him on Twitter here.
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