Prepaid gift cards make popular presents and no-brainer stocking stuffers, but before you purchase one be on the lookout for signs that someone may have tampered with it. A perennial scam that picks up around the holidays involves thieves who pull back and then replace the decals that obscure the card’s redemption code, allowing them to redeem or transfer the card’s balance online after the card is purchased by an unwitting customer.
Last week KrebsOnSecurity heard from Colorado reader Flint Gatrell, who reached out after finding that a bunch of Sam’s Club gift cards he pulled off the display rack at Wal-Mart showed signs of compromise. The redemption code was obscured by a watermarked sticker that is supposed to make it obvious if it has been tampered with, and many of the cards he looked at clearly had stickers that had been peeled back and then replaced.
“I just identified five fraudulent gift cards on display at my local Wal-Mart,” Gatrell said. “They each had their stickers covering their codes peeled back and replaced. I can only guess that the thieves call the service number to monitor the balances, and try to consume them before the victims can. I’m just glad I thought to check!”
Kevin Morrison, a senior analyst on the retail banking and payments team at market analysis firm Aite Group, said the gift card scheme is not new but that it does tend to increase in frequency around the holidays, when demand for the cards is far higher.
“Store employees are instructed to look for abnormalities at the [register] but this happens [more] around the holiday season as attention spans tend to shorten,” he said. “While gift card packaging has improved and some safe-guards put in place, fraudsters look for the weakest link and hit hard when they find one.”
Gift cards make great last-minute gifts, but don’t let your guard down in your haste to wrap up your holiday shopping. There are so many variations on the above-described scheme that many stores have taken to keeping gift cards at or behind the register, where cashiers can more easily spot customers trying to tamper with the cards. As a result, stores that take this basic precaution may be the safest place to purchase gift cards.
Update, Dec. 20, 7:30 a.m. ET: Mr. Gatrell just shared a link to this story, which incredibly is about another man who was found to have bought tampered gift cards in the very same Wal-Mart where Gatrell found the above-pictured cards.
That story includes some other security tips when buying and/or giving gift cards:
When purchasing a gift card, pull from the middle of the pack because those are less likely to be tampered with. Also, get a receipt when buying the card so you have proof of the purchase. Include that receipt if you give the card as a gift. Finally, activate the card quickly and use it quickly and keep a close eye on the balance.