How gift card cloning works

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.

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