BBB: Beware Gift Card Fraud During Holidays

More than $18 billion in gift cards were purchased in 2005 and projections for 2006 approach nearly $25 billion in total gift card sales. Where there is big money, crooks, criminals, thieves and scammers are soon to follow.

The Better Business Bureau system has issued an advisory through its 129 local BBBs across the United States and Canada warning that a number of scams surrounding gift cards have evolved and consumers should be cautious about where and how they purchase them.

“Gift cards have provided a solution to the age-old problem of deciding what types of gift to buy, but with the convenience of these cards, there is also the possibility of fraud,” said Bill Moak, President of the Better Business Bureau of Mississippi. “We urge consumers to be careful when purchasing gift cards during the holiday shopping season.”

Two types of gift cards exist: Those sold by retailers, which can only be used at that store or sister stores; and bank cards, which can be used just about anywhere. The bank-issued debit cards, however, come with a variety of fees and restrictions.

Gift cards can also be purchased on Internet auction sites, but oftentimes these cards have been stolen and ultimately hold no value.

In another scam, crooks copy down the numbers on the back of gift cards displayed on retail store racks, then wait several days in hopes the card is sold before calling to find out the balance left on the card. When they find one with a balance, they go online for a free shopping spree using that card number, essentially picking the pocket of the legitimate customer or gift card recipient. Another scam involves corrupt cashiers who pocket newly loaded cards and hand customers blanks.

The Better Business Bureau offers several protective measures consumers can take to guard against ending up with a fraudulent gift card:

• Buy from reputable sources, preferably directly from the store and, if possible, not off a rack. The BBB discourages buying gift cards from online auction sites because it's difficult to know whether the card is stolen or will arrive with the promised amount.
• Do not rely solely on a sales clerk or cashier to select a cards from publicly inaccessible stock, e.g., behind the counter. Always personally examine the card for signs of tampering – specifically looking for evidence of the PIN number having been exposed.
• When buying a gift card, keep the original purchase receipt with the card as proof of purchase.
• Immediately after buying a gift card, ask the cashier to scan the card itself to ensure the card is valid and has the proper value.
  

If an individual does find that they have been the victim of a gift card scam, the BBB suggests the following actions:

• Retain the proof of purchase receipt.
• Most gift cards will have a toll free telephone number on the back of the card for consumers to report problems through company customer service representatives.
• The BBB encourages use of company customer service operations as a first step in the process – as opposed to returning to the point of purchase where personnel will have little authority or opportunity to resolve the issue.

For additional tips, or to file a complaint, contact the Better Business Bureau at 800.987.8280 or online at www.bbbms.org.