A scam resulting in consumers purchasing worthless gift cards is impacting people in Canada, according to several police departments.
The “card draining” fraud has been reported to be a serious problem in the United States, but law enforcement in Canada is also concerned about the prevalence of scam here.
Terry Seguin, senior constable with the LaSalle Police Service in Ontario, has personal experience with this gift card scam, and says that these types of frauds have been happening for a couple of years.
“My own family member was a victim of purchasing everybody gift cards — I was a recipient of one of them — and there was nothing on the card,” Seguin said. “Luckily, the cards were reimbursed, but somebody is out of money whether it’s the store who sold the card or the merchant who supplied it. So, there’s a fraud or a theft of these funds somewhere along the lines.”
The way the fraud occurs is that scam artists temporarily steal unactivated gift cards from a store, and then subsequently return them back to their display rack after manipulating the barcode or stealing the activation code number. Unsuspecting consumers then purchase the gift cards and activate them, unaware that they have been tampered with.
The Daily Mail reported that several people in the U.S. have experienced instances of purchasing a gift card from a retailer, usually for a family member or friend, only for the card to possess zero funds when the recipient attempts to use it.
Pennsylvania Attorney General Michelle Henry put out a press release warning people of the seasonality of this scam.
“The holidays present additional opportunities for scammers to deceive and steal from consumers who choose gift cards as presents for loved ones,” Henry said. “Be sure to take a careful look at the cards you purchase and keep your receipts, just in case.”
The fact that gift cards are usually offered as a present and sometimes not used for long periods of time presents a challenge to investigating the scam.
“It may be weeks before the gift card is turned over to the intended recipient, then weeks or months more before the card is finally used and the fraud discovered,” said the Ottawa Police Service Fraud Unit in an emailed statement.
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Seguin talked about how the different ways scammers go about conducting this fraud. One way is that scam artists put an entirely new barcode sticker on top of the real barcode of the gift card. When the fake barcode is scanned, the balance gets deposited into the scammer’s account. Scammers also sometimes carefully peel off the grey sticker covering the card’s activation code, take note of the code, and re-conceal it with a new grey sticker that can be purchased in bulk online.
Scammers “have software that lets them know once that card has been activated,” said Seguin. “It doesn’t do it automatically… but most people don’t spend a gift card immediately, so the scammer’s got time to drain those funds.”
To reduce the risk of being victimized when purchasing gift cards, police say consumers should look out for potential fraud.
“When purchasing a gift card, check the receipt at time of purchase and compare data on receipt to the numbers on the card,” said Victor Kwong, media relations officer with the Toronto Police Service. If the numbers do not match, there is a chance a fake barcode on the gift card was scanned.
Consumers can also check for signs the original grey sticker was removed.
Since scammers sometimes steal the funds because they possess the activation code, Kwong also advises people to use gift cards as soon as possible after being purchased.
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