Archive for the ‘Scams’ Category

The old adage “if it sounds too good to be true, it is” clearly applies in this example of SPAM text messages claiming gift cards at a highly discounted rate.

There are several red-flags that show this type of advertisement is likely a scam:

  1. Unsolicited telemarketing via automated messages is illegal.  This includes unsolicited telemarketing text messages.  Anyone that sends you such a text is flouting the law and is unlikely to be offering anything legitimate.
  2. Companies just don’t give away something for nothing.  The best discount you can hope for on a gift card is from one of the many secondary marketplaces that exist.  You are unlikely to get better than a 20% discount on a gift card an popular gift cards (like Walmart) are in high demand and sell for a much smaller discount.
  3. The text messages claim the gift cards are free but upon further investigation, there is a small fee.

An article in our local paper (Daily Post 120223 gift card scam) highlights a slight variation of an old threat.

One of the most common and long-running scams involves gift cards displayed within reach of customers that contain the gift card number in numerical or bar-code format visible on the packaging.  Thieves simply scan the bar-codes or copy the numbers, clone the cards onto blank or previously used gift cards from the same merchant, and wait for the gift cards to be activated by unsuspecting customers.

Once activated, the thieves use the cards before the customer has a chance to.

In this new twist, it is unclear whether the retailer has attempted to thwart the old scam by hiding the gift card identifier inside the packaging.  Regardless, the thieves are stealing the gift cards, opening the packaging, and replacing the gift card inside with another one, keeping the original gift card.  They then return the tampered gift card packaging back to the retail racks.  When the gift card is activated, the customer is left with a worthless depleted gift card while the thieves have the newly activated one.

This particular instance may simply be unsophisticated thieves who aren’t capable of cloning gift cards or it may be more sophisticated thieves attempting to get around packaging that doesn’t easily show the gift card number.

We’ve reported many times before on gift cards being stolen by Postal employees (like here, here, and here) and employees of other package carriers and even employees that deliver mail in large buildings.

What is surprising is that people still send gift card unprotected through the mail.

As a reminder for the holiday season, when a large percentage of gift cards are purchased and mailed each year, here are some tips on safe mailing.

  • Before you mail, write down the numbers of the cards to make sure you can report them stolen if they don’t arrive
  • Verify with the recipient that they arrived and still have the initial value on them.
  • Do not package gift cards in something obvious, like a greeting card.  Gift cards can be felt very easily and snatched from the mail.  A better idea is to put gift cards is a small box.
  • It isn’t just theft that can make your gift card disappear.  A small percentage of gift cards mailed in greeting cards or plain envelopes get mangled by the automatic sorting machinery; the gift cards can get separate from the letter.


John over at GiftCardBin sent us this report of a new scam:

I was contacted earlier today from a lady who wanted to sell us a gift card.  She was unfamiliar with the process but she had a Lowes gift card and was referred to the site by a friend.  I like to find out how they received the card and why they are selling it.  Her story:

She received a message from a “friend” in Ghana who needed help.  He was going to be sending her a gift card and asked that she cash that gift card in with any site that buys gift cards.  This is how she learned about us.  He was attacked in Ghana and needed money but was afraid to have anything sent directly to him.

She did not say if she was going to be sending him money back, keeping some of it, or sending it all back.  I don’t know if she even really knew the person but this sounded all too familiar to email scams I have received myself in the past.  Nonetheless, we declined to accept her cards.

I can only assume this is going to become a trend for some to scam not only consumers, but secondary gift card business’s.

I’ve seen reports previously about telephone scams where thieves call people and tell them there is a problem with their bank account and they need to verify information.  People seem to trust that a phone call is legitimate and readily hand over personal information, including account numbers and passwords. The results of this of course are disastrous.

This scam seems to have migrated over to include gift cards as we’ve just seen a report of someone receiving a phone call claiming they won a Wal-Mart gift card and a credit card was necessary to complete the award.  They of course never received the gift card but instead were treated to a large charge on their credit card bill.

A simple rule holds true for avoiding scams, whether it is through email or by phone; don’t trust any information unless you initiated it.  If you receive an email asking you to click a link, don’t trust it.  The safest way is to go to the website directly by typing the URL into your browser.  If you receive a phone call asking you for information, unless you are familiar with the person, don’t trust them.  Find the number yourself, call the institution, and verify the information.

While this story has little relevance for gift card consumers, it is just too ridiculous to ignore.

Earlier this month, a man called a 24-hour Wal-Mart in Columbus, Ohio, at 1 AM and told an associate he was with Wal-Mart’s IT department. The caller instructed the associate to activate gift cards, read him those card numbers and then scratch off the tape on the back of the cards so she could tell him the authorization codes, police said. And the associate obliged. Hours—and more than $11,000 in online fraud—later, the store realized it had been had.

It must be hard for the non-techies of the world to keep up with all the latest tech terminology.

I just read an article entitled “New scam: Cloned gift cards, spyware that tracks reloading.”  What the thief did was to write a program that constantly accessed the merchant’s card balance checking website to check to see if the card had been activated.  He simply automated what most thieves practicing this type of gift  card theft do by hand.

Spyware, on the other hand, is a term used for software that is installed on an unsuspecting persons computer that monitors their activity, reporting such things as passwords for banking and other websites so thieves can drain the accounts.

But spyware could easily look for card balance checks and grab the gift card numbers, which thieves could use to clone the cards and spend the money.  And it would help the thieves avoid the potentially risky task of stealing the gift cards in the first place to capture the card numbers.

Just one more potential problem to watch out for.  If you fall victim to spyware, there is a lot more at stake than the balance of your gift card.  It is important to have internet and anti-virus security software on your computer and keep it up to date.

Technology often creates problems.  With the advent of gift cards and the electronic systems behind them, came the potential for problems and abuse.  We’ve seen plenty of examples of where technology has been used against retailers and consumers such as in the fraudulent cloning of gift cards and siphoning of their funds.  What you may not know is that there are also plenty of examples of when gift cards have stopped working properly, either through bad design or human error.

This story probably falls in that last category.

Last December, I paid cash to obtain $800 worth of American Express gift cards to give as Christmas presents. In March, my son tried to use his card. He was told that there was no money left.

He and I both placed calls to the customer service number on the back of the card. We were each told the money on the card had been sent to the Massachusetts Unclaimed Property division. The card said it was valid thru April 2014.

I contacted the Unclaimed Property, as suggested by American Express customer service. The first time, the Unclaimed Property division said nothing had shown up. I again tried to reach American Express, which said they could not add money back to the card without the receipt. I couldn’t get any answers about what happened.

This kind of thing happens all too often.  But what makes the difference between feeling taken advantage of and getting a problem successfully resolved is the persistence of the customer and the ultimate nature of the company involved.  I’ve seen lots of frustrating stories from people about American Express gift cards, but I’ve also seen some examples where the company has gone out of its way to right a wrong, when the customer was persistent enough to pursue a resolution when he was initially rebuffed.

You might find that the company that issued the gift card is quite reasonable and will fix the problem without too much fuss.  Or you might find that it takes some persistence to get your problem resolved.  What people don’t realize is that if no one complains about problems, companies have little reason to improve; it simply isn’t enough of a both.  I personally do my best to pursue any matter where I feel that I’ve been treated unfairly, even if it is for a few dollars and even if it is just writing a letter to a company to tell them why I will no longer be doing business with them.

Here are some tools you can use in increasing level of escalation:

  1. Call regular customer service
  2. Ask to speak to a customer service manager
  3. Search Google or Bing for executive level contact information for the company and write them letters
  4. File a Better Business Bureau complaint
  5. File a complaint with your state’s departement of consumer affairs
  6. Contact your local TV station or newspaper consumer advocate and ask them to contact the company on your behalf
  7. File a story at Consumerist so others will see your experience
  8. Share your experience on Twitter.  Many companies monitor Twitter and respond to complaints.
  9. For financial products, file a complaint with their state or federal regulator, such as the Federal Reserve.
  10. If you believe the company has behaved in a criminal manner, contact your state’s attorney general to file a complaint.  State Attorneys General will pursue investigations if enough people complain.

The point is, there are lots of ways you can pursue resolution beyond simply calling customer service.

Even better, search Google or Bing BEFORE you buy a particular gift card to see what other people are saying about the company.  Try searches like “company_name gift card sucks” or company_name gift card problems.”

Sometimes, none of these things work.  I had an open-loop gift card that showed no balance when it should have had $25 on it, as it had never been used and neither the website or customer service number provided a way to get in touch with a human.  None of the tools above worked.  But I felt good knowing I had tried to get resolution.

In the story above, here is what happened:

After presenting the situation to the folks at American Express, they dug in to figure out what happened — which apparently got a little confusing along the way — and then righted the wrong.

When you’re about to try to gird for a fight with a company, take the time to be sure of the facts and gather up all the documentation you can to help make your assertions as clear as possible.

First, in sorting things out, they found out that cards purchased in December were used. But the provided card number was indeed still valid and should have had money on it.

She said she couldn’t address what might have been said along the way in those customer service calls, but did explain the only reason there is an expiration date on the cards is so transactions can be processed.

“As funds on American Express Gift Cards never expire, we are sending her a replacement gift card with the remaining balance,’’ American Express spokeswoman Vanessa Capobianco said.

Ah yes, one more thing to remember, act reasonably and be nice to the people you talk to.  In the slim chance that you are wrong, that will help save-face considerably, and it might actually help you get resolution faster.

One of the oldest and most successful gift card scams is called gift card cloning.  To clone a gift card, thieves grab the information from unactivated gift cards on store shelves, duplicate the cards using a magnetic card reader/writer, and wait for the cards to be activated.  Once activated, they spend the gift cards before the purchaser does.

Gift card cloning is a serious problem any time gift cards on display at stores are easily accessible by customers.  We recommend that you don’t buy gift cards that are on display where anyone can get to them.

One of the best descriptions I have seen of the entire process can be found in a recent article on a thief who got caught recently.

BEAVERTON – Sealtiel Chacon Zepeda was standing at a Fred Meyer sales register spending a gift card when curiosity struck.

He wondered how gift cards worked, how the little magnetic strip on the back of them turned cash into store credit and how easily he could reproduce the information stored on the card.

His questions, answered by 20 hours of Internet research, sparked an idea that led to Zepeda stealing $6,000 at local stores, rending numerous customers unable to use their gift cards.

The idea: cloning gift cards.

Zepeda, 22, who pleaded guilty last week in Washington County Circuit Court to five counts of computer crime, used a system that Beaverton Police Detective Michael Hanada said law enforcement nationally had hardly seen in early 2009, when Zepeda was scamming retailers, and local police haven’t seen since.

Zepeda cloned gift cards that others had purchased using a computer program he found online and the swipe of a card through a magnetic card reader that was also capable of rewriting the card’s information.

“This is the first time I’ve ever seen it,” Hanada said. “This was really unique.”

The case began in January 2009 when local Fred Meyer stores started receiving complaints from customers who came in to redeem gift cards only to find their cards had a zero balance.

Many stores, including Fred Meyer, offer a service for customers to check the balance on their gift cards online or over the phone by entering in the gift card’s number. Fred Meyer Stores’ fraud investigators detected that the cards had been tampered with when they saw that each card racked up hundreds of balance inquiries a day.

Read more …

A few times in my life I’ve bought tickets for an event, such as a concert or baseball game, from a scalper in the vicinity of the event itself.  The results have been mixed; sometimes the tickets are what they say the are, sometimes not, but I went into them with the full knowledge that I might not get exactly what was being offered.

If someone offers to sell you a Home Depot gift card at a steep discount, right in front of Home Depot, you might be suspicious and with good reason, as this report of just such a scam relates.  There is simply no way to tell on the spot whether a gift card has any value on it whatsoever. In this sense a gift card is much easier to fake than an event ticket.

Many of the scams involving gift cards are due to people doing what common sense would dictate otherwise.  It’s definitely not a good idea to buy a gift card from some random person on the street, or on Craigslist.  Ebay at least has some buyer protections (through PayPal).  You best bet if you want to buy discounted gift cards is to use one of the secondary marketplaces we’ve listed on our resources page.

I did a post the other day on bogus gift card websites and how to spot them.  Today I was presented with another humorous example of one of these type of bogus websites which may be as benign as trying to capture eyeballs for ads or direct traffic to other affiliated sites, or could possibly contain malware or link through to out-and-out scams.  Take a look:

Notice anything peculiar?  Last I checked, paying more than face value for something wasn’t actually a deal.  I think the algorithm used to create the site (and probably many like it) clearly has flaws.

Imagine walking through an open-air bazaar in a third world country.  People are yelling at you from all sides, groping at you, making outrageous claims about how they have the best deals.  Someone might attempt to pick-pocket you.  Would you use your credit card at one of these merchants?  Not if you were smart, as there is a chance they would steal your number and ring up a bunch of charges.

Well, that happens to be a perfect analogy for the Internet.  In general, it is not a safe place to be and there are quite a few people out there that are trying really hard to scam you our of your hard-earned money.  That being the case, the general principles of doing ANYTHING on the Internet should be caution and an awareness that things are not alway what they appear.

Let’s look at an example.  I recently came across a website that appears to be a Q&A blog where someone asks a question about whether a gift card can be used online.  I’ve seen this question about 100 times because open-loop (Visa-type) gift cards can be very difficult to use for online purchases.  It is a very good question.

Ok, first red flag, the English is horrible.  Now, let’s look at the answers: Read more…

The latest scam to involve gift cards is a decidedly low-tech one.

It looks like someone crashed a bunch of weddings in California and stole the piles of gift cards (and cash) given to the bride and groom and has been doing so for several years.

The problem is that gift cards are usually about as untraceable as cash, but aren’t usually treated as such.   While it may be conspicuous for someone to walk out of a wedding with large boxes of gifts, raiding the gift card basket takes mere seconds and can net a crook thousands in gift cards and sometimes envelopes of cash.

This can be exacerbated by the fact that wedding receptions are often held in places and at times that are open to the public, and are often attended by a lot of people that don’t know each other, making it easy for a thief to steal while blending in.  And most people don’t expect theft at a wedding.  At our wedding one of our guests expensive digital camera was stolen.

Whether you are mailing your gift cards, receiving them at a wedding, or leaving them in your car, take the same precautions with gift cards as you would cash – make them look like something other than what they are, hide them, or guard them.

Anyone who has tried to use up the last few bucks on their open-loop gift card knows that most retailers don’t support split tender transactions, much less even know what one is.  A split tender transaction is where you pay for something using two different kinds of payment, such as a few dollars from your gift card and the rest in cash.  Asking a retailers to do a split tender transaction is a sure way to get looked at cross-eyed.

Well, I hadn’t thought about this much before coming across this story, but apparently split tender transactions are a problem online too.  I have an online storefront myself and the off-the-shelf software I used to create the storefront doesn’t support any type of split tender transaction, such as paying with multiple credit cards.  I suspect brick-and-mortar retailers have a similar problem with their POS systems; they just aren’t made to do split tenders.  Interestingly enough, restaurants are one place where split tenders are VERY common, as checks are routinely split across multiple credit or debit cards, because, well, they have to.  Customers would rebel if restaurants didn’t allow them.

The real problem is not that retailers, whether brick-and-mortar or online, don’t support split tender transactions.  The problem is that issuers of open-loop gift cards refuse to acknowledge there is a problem with customers getting the last few dollars from their gift cards.  A common retort to a suggestion of a problem is to point to a split tender transaction as an easy way for people to completely use up their card, when this clearly isn’t possibly in the vast majority of circumstances.

I’ll file this one under scams.

Apparently inComm, the company behind the issue of Vanilla Mastercard prepaid gift cards accidentally issued some cards that when activated, had no limit on them and allowed the holder to spend way past amount the cards should have been limited to.

This is the first I’ve heard of a glitch like this for such a prepaid card.

Apparently some thieves became aware of the glitch and started buying the cards and using them to purchase thousands of dollars of electronics. About five people were arrested for knowingly using the cards to spend more than they should have.

However, I suspect at least some of those accused of fraud will have a perfect alibi – that they were given the cards and had no idea how much was on them, as you have to go out of our way to determine the remaining balance.

We just became aware of a new scam involving open-loop gift cards.

Gift card scams involving closed-loop, or retailer specific gift cards (like Target or Wal-Mart) are common.  Thieves can easily get the information necessary to identify and duplicate the card from the outside of most of these type of gift cards, which are displayed on racks accessible to anyone in the store.  They wait for the gift cards to be activated and then quickly duplicate them and drain them, before the purchaser has a chance to use them.

But this hasn’t been a problem for open-loop (Visa/MasterCard/American Express) gift cards as the information necessary to identify the gift card is well hidden away inside the tamper-proof packaging.  Before we discovered this scam, we were not aware of ANY verified repeatable scam involving open-loop gift cards that didn’t involve rogue store employees, a relatively small risk.

But it seems that thieves have found a new way of scamming these cards.  By applying a sticker to the back the replaces the bar code that is there, which is used in activation, they can redirect the activation over to another card, one they have possession of.  When the purchaser tries to use the card, they find that it has not been activated.

If you buy an open-loop gift card from a place in a store that is easily accessible to anyone, be sure and inspect it carefully to look for any indication the activation bar code on the back of the packaging has been replaced.  If you can lift a corner of this sticker off and see another one underneath, report it to the store employees.  Your best bet is to buy ANY gift cards only from stores that keep them behind the counter.

We’ve previously reported on bogus free gift card scams on Facebook, and bogus free gift card SPAM emails, well now there is another tact that scammers are using by offering free gift cards:  text messaging.

It goes like this, you receive an unsolicited text message purporting to be from Wal-Mart and offering free gift cards under a customer appreciation program.  You call the number in the text message and they ask for your personal information, possibly including your social security number, and a credit card to pay for shipping and handling to send the gift card to you.

What they are really doing is harvesting your sensitive personal information, possibly for identity theft, and charging you many times the quoted shipping and handling cost for a “free” gift card you will never receive.

I am really scratching my head as to why people are so gullible?  Who in their right mind thinks that companies profit from giving away free $1,000 gift cards?  Why don’t people use more common sense about things like this?

If something seems a bit too good to be true, at least Google it or Bing it (or Bingle it) before you go off and give some unknown person your sensitive personal and financial information?

In another attempt to get people to go for bogus free gift card offers, this scammy press release claims to be about how to identify real free gift card offers from fake ones.  But reading it ought to give anyone reason for concern.

According to the policy of the company following things are mandatory in order to be eligible for a FREE $1000 Best Buy Gift card:

1)      You should be USA resident

2)      You should be above 18 years old

3)      You must participate in the survey program COMPLETELY!

If you can fulfill the demands of the above policy made by “Price-Rewards LLC”, then chances are more that you will definitely win a FREE $1000 Best Buy Gift Card.

Now, anyone who reads that and still tried to get a free gift card ought to have their heads examined.

Here is an interesting comment to a post on Plastic Jungle:

I was selling Visa Gift cards on Ebay for $125 for a $100 card. I couldn’t figure out why they would pay more but was happy they were. After ebay and paypal fees and shipping, I only made around $10. Well, around a week later, a guy who had purchased $1500 in cards did a chargeback on all 14 transactions. If I had not sent them with a tracking number so I could prove that they were received, I would have lost all the money. Once I gave the tracking number to Paypal, they released my money to me. If you ever sell a gift card, don’t just stick a stamp on it, you can’t prove that you sent it or that it was delivered. You need to go to your post office and pay extra to get a delivery confirmation. Boy am I glad I did it that way. 4 other people that I sold cards to tried to scam me the same way but I won because I had a tracking number. Who knows, they all could have been the same guy.

This is similar to the Craigslist scam that we reported on a few days ago, but from the perspective of the buyer scamming the seller.

While there are few options for selling open-loop (Visa type) gift cards among the plentiful sites where you can buy or trade gift cards (see our resources page), we have yet to hear that any of those sites are scams; in fact they all appear quite legitimate.  You are much better off buying of selling used gift cards through one of those services than you are through Ebay or Craigslist.

If my SPAM filter was less efficient I might have alerted people to the abundance of gift card scams that exist via SPAM earlier, but alas, someone recently forwarded me what I am sure people are getting every day.

These scams are no different than the ones that have flourished on Facebook in the last several months, namely, they are too good to be true.  In order to qualify for the free gift card, you would have to jump through quite a few hoops, including purchasing products and taking out a loan.

The real goal of scams like this is to harvest personal information.