Buying Gift Cards From A Store's Display Rack Could Get You Scammed

For many of us, gift cards are a go-to gift idea that seems especially safe. While they're typically associated with a specific retailer, gift cards let the recipient buy what they want, which guarantees it'll be something they like. In short, gift cards are less of a risk when gift-giving ... or are they? As the Federal Trade Commission has alerted consumers to in recent years, gift cards have become a popular means for fraud. Of late, scammers have figured out how to steal gift cards from store racks and drain them of their funds before they can be used, turning the cards into "zero-value" cards.

As reported by the FTC, in 2021 alone, consumers lost a reported $148 million in stolen gift cards. Much of this was related to scams in which thieves convinced fraud victims to pay with gift cards or share the card's information. Now, however, with the draining scam, thieves have found a new way to get to a gift card's funds covertly. Fortunately, there are a few simple ways to protect yourself from this swindle.

How thieves drain gift cards

In this draining scam, thieves take gift cards off of store display racks, commonly seen at retailers like Target, Walmart, and Best Buy, as well as grocery stores and pharmacies — to procure the card's information; that is, the card's number, barcode, and PIN. They then surreptitiously return the cards to the racks. The scammers then input the information into a computer program that tracks the card's activity, and once the card is purchased and funds are added, the thieves get an alert, at which time they drain the card of its funds using the stolen numbers. Later, when someone is ready to use the card themselves, they find the card has zero value.

Scammers target store displays that aren't at the front of a store, where their activity can be more easily observed. Further, another tactic that's been reported involves thieves placing a phony barcode over real ones. With all this said, the scammers' work is not flawless, and there are ways to check if a card's been compromised. Speaking to WTXF-TV station in Philadelphia, Dan Roccato, a University of San Diego finance professor, advised, "Make sure the card is sealed. Make sure the protective cover is still on, it doesn't look like it's been tampered with in any way."

How to protect gift card purchases

Per WalletHub, gift cards are the most popular go-to gift for the holidays and special occasions, a takeaway that becomes evident with a look at gift card sales. Per the personal finance company, gift card sales in 2023 were projected to be $204 billion, an increase of 5% year-over-year from 2022. So just because there's a new draining scam going around, that doesn't mean you should add gift cards to your list of things to cut from your holiday budget. You just need to make sure you buy your cards safely.

In addition to inspecting gift cards for tampering (e.g., if the silver scratch-off label concealing the PIN has been removed), experts also recommend that if you buy a gift card from a store, get it from a cashier instead of the display racks. This said, if you're in a rush and do take a card from the racks, don't buy the ones in the front, as these are likely the ones that have been tampered with; get yours from the back.

Better yet, purchase your gift cards online. This won't protect you entirely from fraud, as there's always the possibility of a database breach, but it will better protect you from the draining scam. And, lastly, as the Better Business Bureau says, if you do come across a card you suspect has been altered, take it to the store's customer service, so that no one else will accidentally buy it and get scammed with a zero-value card.