Consumer, law enforcement leaders warn of gift card fraud
With the official start to the holiday shopping season just days away, local officials are warning consumers to be protective of their credit information, and warning retailers to be careful about gift card fraud.
Officials at the Better Business Bureau of Upstate New York, citing numbers from the National Retail Federation, report more than $31 billion was spent last year on gift cards. A study by LexisNexis says annual fraud costs are even higher.
Consumers and retailers alike are being warned about gift card scams involving stolen credit card information. Todd Laster, Special-Agent-In-Charge at the US Secret Service field office in Buffalo, explained that many gift cards have been purchased with stolen credit card information, some of which was acquired locally.
"We brought the case to the US Attorney's office and these individuals are being prosecurted," Laster said. "They were skimming credit card numbers from gas stations."
The specific gas stations were not revealed but US Attorney William Hochul, who joined Laster and Better Business Bureau of Upstate New York president Warren Clark at a news conference Monday in Amherst, says retailers need to be extra careful with screening their employees. In some pending cases, the suspects were alleged to have stolen credit information while on the job.
Retailers are also advised to be watchful of people who attempt to use multiple cards to make a purchase.
Hochul says in some cases involving gift card fraud, thieves are programming the cards with stolen credit information. The gift cards, he explained, don't require the same level of scrutiny as credit cards at the checkout counter.
"If the fraudsters can successfully take the value of that credit card, which does have this identifying information, and put it on to a gift card which only has a value, they can then take that gift card anywhere and not have to be worried so much about somebody also verifying their name, asking for your license, asking for any other identifying information," Hochul said.
The advice for consumers, meanwhile, includes being extra watchful of one's credit card and perhaps acquiring and using a slip which protects the card from covert scanning attempts by passing thieves. Consumers are also warned to avoid third-party gift card offers, in which a card at a set value is available for a lower price. Officials warn that's a likely scam attempt to get the buyer's own credit information.
Not only do consumers suffer but also retailers, whose reputations take a hit when fraud strikes, said the Better Business Bureau's Warren Clark.
"Businessess are the heart of our community and our economy," Clark said. "If businesses have huge losses, we all pay for that."
Clark says according to the National Retail Federation, fraud costs American families about $400 extra per year.