Gift Card Fraud

[Quirk]

I got an email about this from one of my acquaintances who tends to believe every chain email she gets, so I thought, "here's another exaggeration or urban legend -- retailers can't be so stupid as to allow these cards to be so easily compromised." I was wrong -- they are.

Here's a recap of the scam from about.com

Gift Card Scam

Netlore Archive: Email rumor describes a new scam in which crooks copy down the numbers of gift cards sold on store display racks and use them to make purchases online

Description: Email rumor
Circulating since: November 2006
Status: True
Analysis: See below


Email example contributed by Krisztina B., 16 November 2006

Once they find the card is "activated", and then they go online and start shopping. You may want to purchase your card from a customer service person, where they do not have the Gift Cards viewable to the public.

Please share this with all your family and friends...​

Comments: True. I found confirmation in several different news sources that this form of consumer fraud is indeed on the rise. The Wall Street Journal described the scheme as follows:

In one scam, crooks copy numbers from gift cards hanging on store racks. After the cards are purchased and activated, buyers use them to shop online by entering the card numbers.

So do the thieves. To figure out which cards have been activated, they phone an 800 number to check on balances for card numbers they've copied. When they discover activated cards, they use the card numbers to buy merchandise on a store's Web site, explains Dan Doyle, vice president of loss prevention at Beall's Inc., a Southeastern department-store chain. Given a selection between prepaid gift cards displayed on an open rack versus ones kept behind a customer service counter, clearly the latter is the safer choice. Some gift cards have additional security protection in the form of a PIN which can only be read by scratching the coating off the back of the card. Always check such cards for tampering before you purchase them.​

I never buy or use those things anyway, but for what it's worth...

 

[rdawson808]

Weird.

The ones I always see don't have any numbers on them. For instance Williams-Sonoma, Macys, and Nordstrom don't put numbers on the gift cards.

bob

 

[Arethusa]

Questionable at best. No one competent steals things and has them shipped home. I doubt this actually happens much.

 

[VMan]

Originally Posted by Arethusa

Questionable at best. No one competent steals things and has them shipped home. I doubt this actually happens much.

What you do with this (and with stolen credit cards) is have the item shipped to an abandoned property in an inner city area. You get it shipped overnight, and specify a delivery time (you can usually get them to deliver it in a one or two hour window) and just wait outside the delivery address at that time.

Of course, I don't encourage that, it's just how it is done.

 

[auto90403]

Originally Posted by VersaceMan

What you do with this (and with stolen credit cards) is have the item shipped to an abandoned property in an inner city area. You get it shipped overnight, and specify a delivery time (you can usually get them to deliver it in a one or two hour window) and just wait outside the delivery address at that time.

Of course, I don't encourage that, it's just how it is done.


those aren't neighborhoods where a white boy like me is going to hang out in. so that scam's a non-starter for me.

 

[VMan]

Originally Posted by auto90403

those aren't neighborhoods where a white boy like me is going to hang out in. so that scam's a non-starter for me.

You don't have to do it in the hood. You can just post up in front of an apartment building, too.

 

[drizzt3117]

Originally Posted by VersaceMan

What you do with this (and with stolen credit cards) is have the item shipped to an abandoned property in an inner city area. You get it shipped overnight, and specify a delivery time (you can usually get them to deliver it in a one or two hour window) and just wait outside the delivery address at that time.

Of course, I don't encourage that, it's just how it is done.

I know an old scam (which involved a bit more leg work) was to case out someone's house to see when they actually left, then order something (most likely computers, very expensive laptops) with their CCs overnight (since a lot of places won't ship except to the CC's billing address) and have it left w/o signature, and snatch it off the porch when its left. This happened to a friend of mine, he got hit with like 5k in illicit charges for laptops on four different occasions in one week. They found out because one of his neighbors saw it and thought it was suspicious, but they didn't catch the guy. However, his CC company refunded his money so HP got screwed.

 

[Quirk]

Originally Posted by drizzt3117

I know an old scam (which involved a bit more leg work) was to case out someone's house to see when they actually left, then order something (most likely computers, very expensive laptops) with their CCs overnight (since a lot of places won't ship except to the CC's billing address) and have it left w/o signature, and snatch it off the porch when its left. This happened to a friend of mine, he got hit with like 5k in illicit charges for laptops on four different occasions in one week. They found out because one of his neighbors saw it and thought it was suspicious, but they didn't catch the guy. However, his CC company refunded his money so HP got screwed.

Then they sell it for what, a couple hundred bucks? Sounds like lot of effort and risk for very little payback as opposed to, say, getting a job.

 

[drizzt3117]

Originally Posted by Quirk

Then they sell it for what, a couple hundred bucks? Sounds like lot of effort and risk for very little payback as opposed to, say, getting a job.

From my admittedly limited knowledge about this scam, they typically sold the brand new computers for about 1/3 to 1/2 of the retail price, about $500-700 for laptops, but they'd buy the stolen credit card numbers in their area for really low prices, dozens from a geographic area for a couple hundred bucks. I'm sure it's not INCREDIBLY profitable but enough to make a couple thousand dollars per week, as I understand. I imagine (but have no direct knowledge) that many of the people doing this were fairly young, high school kids and the like. Sure they'd have some risk but I highly doubt they would face any serious time upon being caught unless it was for multiple offenses

Clearly i'm not condoning theft, but its not like they were making pocket change. On a slightly related note, when I was in high school, some kid from my school was arrested for organizing a crime ring that defrauded and burgalarized people. When they raided his house, they found like 50 stolen guns, hundreds of TVs, VCRs, etc and like $200k in cash. I believe he was 15. This kid, is still in jail, and likely will be for some time. What he actually went down for, was actually ordering a hit on some other kid, the idiot he asked to do it actually shot a kid in the head on school grounds, with like 50 witnesses, with a .22. Since the kid wasn't a very good shot, it wasn't a serious wound and the victim ran across the street to the urgent care clinic.

 

[trogdor]

Originally Posted by auto90403

those aren't neighborhoods where a white boy like me is going to hang out in. so that scam's a non-starter for me.

LOL -- I don't think that the OP was intended as a suggested career change for SF members!

 

[vanity]

You purchase a handheld scanner and scan the cards quickly. It stores the numbers inside its memory. After xmas you go online to check the balance on those numbers and create a new cards with those number to use.

It's pretty simple. The magnetic bar only signifies a number. The hardware and software to create cards with those numbers is cheap and easily accessible. An easy way to stop this fraud is to simply create a PIN for each card. Like your ATM card. Anyone could scan that and recreate another card. It's your PIN that keeps it safe.

If companies make PINs for these next season, this wnot happen.