Gift cards: at risk from rip-off artists?

Could gift cards be the gift that keeps on giving – to the wrong person?mp1

News reports this week have described how thieves write down the numbers on gift cards on display in stores. The thieves then go online and try to use the gift cards to buy goods, according to the news reports. If a particular card hasn’t been activated, they keep trying until it is, according to the news reports.

But the National Retail Federation, Washington, D.C., said Dec. 4 that such theft is rare and difficult to accomplish.

“The retail industry has implemented sophisticated safeguards to prevent thieves from obtaining, and using, consumers’ gift cards,” said Joseph LaRocca, NRF vice president of loss prevention, in a statement. “Most gift cards are outfitted with scratch-off security codes and protective packaging, in addition to a special verification number distinguishing one gift card from another. Also, retailers have created complex back-end systems to prevent criminals from obtaining proprietary gift card information.

“Instances where consumers lose money from theft of gift-card information are extremely rare, but they can happen,” said LaRocca. “Holiday shoppers are encouraged to keep the original receipt from the purchase of gift cards in the unlikely event that they need to return a card to a retail store because it has been used. Retailers can then check gift card purchases to verify that the card was fraudulently used and in most cases can refund the gift card value to the customer.”

NRF estimates that gift card sales will total $24.81 billion this holiday season, up from $18.48 billion last year.

The federation’s Loss Prevention Department includes a Gift Card Working Group chaired by LaRocca. Composed of retail loss prevention and gift-card fraud specialists, its members include American Express, Blackhawk Marketing, Stored Value Systems and ValueLink. NRF said the group was established to address fraud and other vulnerabilities identified in the gift-card life cycle. The group serves as a contact point for retailers and law enforcement professionals to investigate potential losses in the industry.

The group’s recommendations for keeping gift cards safe this season are:

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  • Before a gift card is sold, consumers and retailers should double check the section on the back of the card where the personal identification information is. If the covering that conceals the identification information appears to be scratched off, then the security of that card might have been compromised.
  • Retailers should advise consumers to purchase gift cards only from reputable sources and not online auction sites where they are likely to be counterfeit or were fraudulently obtained.

The National Retail Federation is a retail trade association with membership that comprises retail formats and channels of distribution including department, specialty, discount, catalog, Internet, independent stores, chain restaurants, drug stores and grocery stores.