GIFT CARD SCAM
by: Patt Harvey
United Way 211 in Kansas City, recently received a call from
a consumer who had been scammed for $400 through a gift/credit card
purchase. He reported receiving a phone
call from a person identifying himself as an employee of the power company serving
the consumer’s area. He was calling to
remind the man that his electricity bill
was delinquent and subject to shutoff in three days. As we know, customer service employees often
make such calls and refer the customer to a service such as 211 or another
local agency for possible referrals. Often the consumer has the money but is
unable to get to a payment location.
This “helpful employee” told the customer, “there is a Wal-Mart store
about two blocks from you and they accept gift card payments and will route
them to us. Select the I-Tunes card , take it to the cashier to pay and be
activated. As soon as you get home you can call in to make your payment.”
The man did as told, went home, called in his payment and
relaxed. Three days later he returned
home from visiting a friend to discover his electricity had been disconnected
for non-payment. He called the utility
provider only to be told there was no record of a payment being made. They suggested he call the police department
and report the incident. Unfortunately
the police officer told him he was probably the victim of an electronic scam
and explained to him how it works.
Gift cards have a unique number in a magnetic strip that is
used to track usage and outstanding balances.
This usually works well, and has the benefit that you often won’t lose
your remaining balance if you lose the gift card, since you can simply call to
report the card as stolen or lost. Now
imagine that a scammer comes into a store that displays gift cards on public
racks ( such as Wal-Mart or a grocery store) with a small and inexpensive
mag-strip scanner in his pocket. This
scanner can easily read and store the unique gift card serial numbers. The scammer simply grabs some of these gift
cards from the rack, finds a quiet place
and quickly scans each card from a particular merchant to get its unique serial
number. They then put the cards back
since they are done with them. Next,
real customers come in to buy some of these gift cards and charge them with
real money. Every few hours the scammer
calls the gift card phone number and enters the unique numbers to find out
which cards have been charged – and what the remaining balances are. Most of these systems don’t require a
password, so it is very easy for the scammer to do this. Other times the scammer is able to steal the
PIN at the same time as the gift card number. Most of the cards will be fully
charged and the scammer can then go on a shopping spree and drain the gift card
balances. Law enforcement suggests that
customers do NOT purchase gift cards unless they are in protective wrapping or
are kept under the counter in a secure
location with a sales associate.
There is a happy ending to this story: two emergency
assistance agencies were able to assist the caller in paying his bill.
