Identity theft, fraudulent use of bank accounts and debit cards, and other methods of swindling money away from honest consumers is nothing new. Most of us know someone who has had a banking account or credit card hacked, or we have experienced it ourselves.

gift card scams image

Flickr source

Last month, my Bluebird account was hacked by someone shopping in a retail outlet in Florida, while I was in New Jersey. Someone was likely able to gain my account information and reprogrammed the magnetic strip on another card to mimic mine. The card was probably sold at an auction or traded for something else. Fraud protection allowed me to have my funds returned to the account right away, but I had to wait several days for a new card, so I had no access to the money. It was very inconvenient and a bit scary, but frankly, was not the first time I’ve had an account hacked through no fault of my own.

Enter gift cards

So what is the story with the gift cards you may have given or received this year for the holidays? Anyone who has one may have noticed how easy they are to use and how few protections are in place. There is no need for identification, and usually a simple swipe with no questions asked is the way most transactions go. They aren’t much different than cash, so if you lose a gift card, whoever finds it is likely going to be able to drain the balance without any repercussions.

What’s worse is that gift cards have become popular with both gift givers and receivers, but their ease of use, few built-in protections, and presence everywhere has made them popular among thieves. While there might not be much you can do if you have been given a gift card that has been subject to tampering, you can take a few steps to protect yourself in case it has and keep the following tips in mind.

How gift card scams work

First, it is important to understand how crooks can hijack gift card balances. In most cases, they do this before a card has been purchased. In a typical scenario, the thief goes up to a gift card display, carefully opens the packages and either writes down or uses a scanner to obtain all the needed information. They regularly call the customer service number for the card to find out when it’s been activated and learn the balance. Once the crook has the information, they make a fraudulent purchase online and the balance on the card gets wiped out.

In other cases, thieves may sell the card through an online auction at a discounted price for someone else to use, thereby pocketing some money while obscuring their whereabouts. Never buy a gift card from an online auction site or unfamiliar location. That card is likely to hold someone else’s misfortune, and possibly yours as well.

In a similar manner, a cashier might purchase a gift card, spend the balance, then replace that card with one a customer purchases while they are distracted. The customer gets the empty card, and the cashier gets a second shopping spree.

Unlike most credit and debit cards, gift cards don’t offer much of any fraud protection. What makes them so simple to use becomes a liability, because the cards aren’t linked to an identity or address. A signature is rarely required, and online purchases are easy and can usually be sent anywhere to make the purchase hard to trace.

Wait to activate

So what can anyone do to avoid losing out on a gift card balance? The one protection built-in protection a gift card has is if it requires activation. This isn’t always the case, such as with low-dollar drive through cards like the two I was given from coworkers for Dunkin’ Donuts this year, but higher value cards usually require activation.

One way to protect yourself from fraud is to wait to activate the card until you are ready to spend the balance. Make the call from inside the store as you are ready to get in line or if you’re shopping on the web, activate it just before you hit the purchase button. And while we’re always trying to encourage our readers to be savers and not spenders here at MyBankTracker, it’s probably a better idea to spend the entire balance of the card if it is practical to do so, and as quickly after activation as possible. This way, if anyone has the card information, you will beat them to the balance before they have had a chance to check on its activation.

It is also a good idea to scrutinize the card. If the area over the PIN is scratched off, the odds are very high that your card has been compromised. Keep this in mind next time you buy a card as well — look over the package thoroughly, and search for any signs of tampering.


Not all retailers offer registration of their gift cards, but some, such as Crate and Barrel, Starbucks, and hotels like the Ritz-Carlton offer a gift card registry service. If you report a card lost or stolen, you may have some consumer protections and could be issued a replacement card. If the service is offered, sign up for it right away, and look to purchase cards for others that have such protections.

Did you enjoy this article? Yes No
Oops! What was wrong? Please let us know.

Ask a Question

  • Angelo_Frank

    Most gift cards are activated at time of purchase by the cashier.