Archive for the ‘Scams’ Category

I am surprised this scam hasn’t surfaced sooner or in more ways.

As reported for the Detroit area, scammers/sellers list discounted gift cards on Craiglist.  The sellers even encourage buyers to check out the gift cards online at the retailers website and freely give them the gift card numbers.

Once the purchase is completed, the sellers claim the card has been stolen, they received a replacement, and the original gift card is left worthless.  The scammer ends up with a new gift card and the sale proceeds.

Update:  Here is a news story about just such a scam where the scammer was actually arrested.

You wouldn’t put cash in the mail, would you?  In some respects, putting cash in a letter can actually be safer than putting a fully activated gift card in the mail; as long as the envelope is thick enough to prevent the contents inside from showing through under a bright light.  Gift cards on the other hand can easily be felt in normal letters and especially greeting card-sized envelopes.

This has been a problem for a long time and hardly a week goes by where we don’t hear about a Postal employee (and even UPS) getting busted for stealing gift cards out of the mail.

So why aren’t gift card issuers doing anything to circumvent this?  For instance, how about allowing a gift card to be locked via the retailer or banks website, and only unlocked using a specific code that can be emailed to the recipient or sent in a different letter?  Or perhaps at the checkout counter providing an activation code on the receipt?

We haven’t followed the mobile gift card space much, other than to say that having a gift card on your mobile phone makes it much more likely that you will have it when you need it.  But it looks like the technology hasn’t quite been perfected yet and offerings by some popular retailers, Target and Starbucks can still fall prey to the oldest of gift card hacks, copying the card data while it is on the rack, cloning the card, and then when activated by a customer, spending it before they do.  Making gift cards mobile makes it even easier for thieves to perpetrate this scam as they don’t need any fancy card writers.

Perhaps closed-loop retailers that offer gift cards should solve this fraud problem once and for all before dragging it into new offerings like mobile gift cards.

A UCLA student managed to pilfer over $16,000 off of other peoples Visa gift cards over the course of a couple of weeks.  It isn’t yet clear how the student got hold of the gift card numbers.

We have yet to see open-loop gift cards that are not packaged well enough so that their sensitive information is not hidden away from casual viewing.  Someone would have to open the packaging to be able to copy the gift card numbers, which would be required to steal money from them, and open-loop gift card packaging is very sensitive to tampering.

One possibility is that the student was able to take steal the cards, open the packaging in such a way so it was overlooked by the purchasers, and return them to the store.  Always a good idea to inspect the packaging closely when you buy one of these cards.

The Consumerist reports that some sites have popped up claiming to allow gift card holders to check their gift card balance. But what they are really doing is stealing the numbers so they can clone the cards and drain them.

Only go to the website printed on your gift card to check the balance.

Security problems with store gift cards are widely reported and have been around for at least five years.  As a recent report from StoreFrontBackTalk shows, many store gift cards, including ones from Target and Starbucks, are still allow for the simplest and most insecure of security holes.

This security problem involves someone getting enough information from the gift card on display, such as from a bar code or the numbers actually printed on the card or packaging, so that a thief can clone the card, wait for it to be activated, and then spend the card value before the legitimate customer does.

A general rule of thumb is that if you are able to handle a gift card, so can a thief, so consider the card insecure.  This includes dispaly racks such as GiftCardMall found in Safeway and other stores.  An exception to this rule is open-loop (Visa-type) gift cards, which include secure packaging that prevents this.  In several years of reporting on gift card issues, we have yet to see a problem with open-loop cards in this respect.  An exception would be if the packaging looks to have been tampered with to any degree.

Here is yet another story about a Postal employee arrested for stealing gift cards from the mail.  We’ve previously reported tips on how to increase the likelihood that your gift card will not be pilfered from the mail, but the question becomes, what if your gift card never makes it to its destination.

The best thing you can do is to report the missing mail to your local postmaster.  If they get enough complaints, it can help them find a pattern which can expose a particular employee if theft is occurring.

A bit of a black eye for Amex and Travelocity on this one.  A class action lawsuit accuses them of colluding to charge more for trips when American Express gift cards are used to pay for them than they would otherwise.

Named plaintiff Morris Wilner said he received a $200 American Express prepaid gift car for signing up with Verizon for telecommunications services. He said he discovered the pricing scheme when he tried to use the card to pay for a trip.
Wilner said he visited American Express’s Web site, and was directed to Travelocity’s Awards site, where, using the gift card, he paid $35 more for airline tickets than he would have had he paid through other means.

Apparently spammers have set their sites on stealing iTunes gift cards via a phishing scam whereby emails claiming to offer a way to check the balance of iTunes gift cards direct people to a site that looks like an official Apple site, but instead steal the iTunes gift card info so that it can be drained.

Don’t click on links in email, always type the site in to your browser yourself.

Not like we didn’t see more of this coming given the huge state budget deficits that exist for most states right now.

While so far the legislation is only a proposal, it is one of the more ominous such unclaimed property policies we have seen.  Under the proposed legislation, gift cards would be considered dormant and be grabbed by the state after only one year.  While, in theory at least, if you tried to get the value back the state is supposed to give it back to you, I can think of quite a few ways the state could make this very difficult to discourage people actually getting their gift card value back.

It does like this:

1. Consumer lets card sit in a drawer for a year
2. State grab gift card
3. Consumer tries to use gift card, but it fails
4. Consumer can’t figure out what is going on and issuing company is no help
5. State doesn’t actually make any effort to find the rightful owner of the gift card

And the money is lost.

Isn’t the government supposed to be helping its constituents?

The latest Postal Service employee charged with stealing gift cards from the mail is believed to have stolen as many as 1,200 gift cards.

The best tip we can give you is DON’T SHIP GIFT CARDS THROUGH THE MAIL!  But if you do have to, don’t make them look like greeting cards with a gift card inside, which can be easily felt from the outside.

Since the Facebook free gift card scams broke out a couple of weeks ago, I’ve seen these same type of offers on other sites.   A good rule of thumb is that no-one is giving anything away for free.  That’s not how companies make money.  But if your reading this blog, you probably are smart enough to know that. :)

The numbers are in and wow, a lot of people fell for the free gift card scams on Facebook.  Two separate Ikea scams netted about 110,000 people.

In order to sign up to supposedly get free gift cards, people had to give all their personal information (including dates of birth) and sign up for two marketing offers such as Netflix and

Seriously, did people actually believe that they would get a $500 or $1,000 gift card just for that?

Here is a TV news story about the gift card scam where someone scans the card before activation and then when it is activated they clone it and spend it. This story doesn’t really tell us anything new, but when you hear it from TV, it makes it sound like the scam is happening all the time. Perhaps it is. The anchor’s only suggestion is to buy a gift card from a customer service representative instead of a cashier? What exactly does that mean anyway?

My suggestion is to purchase your cards from an area inaccessible by customers, such as behind the register. If the only gift cards that are available are accessible to anyone, consider buying them online. I am no really surprised that stores like Target and Wal-Mart (the two mentioned in the story) haven’t fixed this problem by making their cards accessible only to cashiers. The reason they don’t do this is that cards that are hidden away don’t sell well and the voices of customers scammed in this way hasn’t turned into a roar yet.

Facebook ads and games are becoming legendary for their scammyness, and it should come as no surprise to anyone that ads for free gift cards on Facebook, such as for a $500 Olive Garden gift card or a $500 Whole Foods gift card where you have to enter your mobile phone number are completely bogus and will only result in unexpected charges on your phone bill.

Basic rule of thumb – if it sounds too good to be true, IT IS!

Update 4/5/10: Yikes, it looks like there is more than mobile phone numbers at stake here. Some of these gift card scams involve the installation of malware on the computers of people visiting the Facebook fan pages involved or other sites. Be careful!

It was bound to happen; someone finally figured out how to scam open-loop (Visa type) gift cards at the checkout counter.

With closed loop card, the identifying numbers or bar are visible and can easily be read by theives. Once you activate the card that has been previously scanned by theives, they can tell through online tools when the card is active active and create a cloned card which they can use to spend. When you or the recipient go to use the card, it no longer has value.

With open-loop cards, this isn’t possible as the identifying information is hidden in the packaging and can not be easily copied.

The latest scam involves the thieves replacing the activation barcode on the outside of the packaging, which contains the code the identifies the card for activation, with a sticker that will activate a different card, which is in the posession of the thieves. The card you purchase never gets activated.

The way to protect yourself against this is to be sure and inspect the packaging for any anomalies that don’t look right, like a barcode sticker.

Looks like at least one UPS employee has gotten into the habit of stealing gift cards from packages shipped through his UPS store. UPS is still likely a much safer bet than the Postal Service for shipping gift cards. The same rules still apply, don’t make it look like a gift card when you ship it.

There is a type of scam involving gift cards that people should be aware of. Apparently someone is sending out spam text messages claiming that the recipient has won a Wal-Mart gift card. When the recipient calls the number in the text message, they are told that they need to pay for shipping and are asked for a credit card number. Presumably then all kinds of charges are run on the credit card.

The moral of this story is don’t give out any sensitive information unless you are sure of whom you are talking to. Always find the number of website address yourself to be sure you are talking to the right people.

Trouble with your gift card at Best Buy? Be careful not to get arrested like one customer did. Seems the Best Buy staff was having trouble with her AMEX gift card and made the unfortunate assumption that she was trying to pass of a tampered with gift card. She wasn’t, the Best Buy staff were just idiots. What’s worse, they actually did this to another person trying to us a MasterCard gift card the same night.

This story reminds us that it isn’t a good idea to purchase gift cards that are not packaged with the numbers clearly inaccessible where anyone can access them.