Home Fraudsters Skimming Gift Cards Before They’re Activated

Fraudsters Skimming Gift Cards Before They’re Activated

While the Credit CARD Act of 2009 included several provisions to protect consumers from hidden fees and expiration dates with gift cards, these popular holiday gifts can still be vulnerable to fraud. A gift card scam that made rounds this holiday season involved skimming gift cards before they were purchased and waiting until they were sold and activated to access the funds. Gift cards use the same magnetic-stripe technology as credit cards do to store and transmit payment account information, so it is easy for any fraudster with a skimmer to copy this information. To deter gift card theft retailers do not activate a gift card until it is purchased, but the card account information is the same before and after activation, and the dormant gift cards are usually displayed somewhere in the open.

Fraudsters have been able to skim many of these deactivated gift cards and then leave them there for consumers to purchase. Most gift cards list a 1-800 number to call for checking your account balance, which the fraudsters use to determine if the card has been activated. Once they know the balance the fraudster simply has to use the stolen gift card account information online or recode the magnetic-stripe information on a counterfeit card to drain the funds.

For more information:

CBS MoneyWatch – Avoid this gift card scam

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