December 17, 2011

Gift card shoppers beware

Posted in Between Us column, Business at 5:31 pm by dinaheng

The great thing about giving gift cards is they’re easy to mail to folks in other cities, they give the recipient the opportunity to buy whatever he or she wants, and the good ones  usually don’t have an expiration date.

The bad thing about gift cards is that they’re vulnerable to theft in ways we rarely think about.

I was at a Los Angeles-area Macy’s recently, ready to use a Macy’s gift card that one of  my sisters had given me for Christmas last year. Yes, it was purchased in December 2010. I kept forgetting to take it with me whenever I went to the store, one of the downsides of getting gift cards.

Anyway, when I got to the register to check out, the sales clerk rang me up, scratched off the PiN code on the back of the card… and the gift card registered a zero balance.

I had never used the card, and had a gift receipt for its purchase.  The adhesive holding it to the gift card enclosure was still on it. But when a sales supervisor looked up the gift card number, records show that two purchases had been made on the card in February 2011 at a Macy’s in the Torrance area, where I’ve never been.

The sales supervisor looked at me askance, saying I could follow up with the store where the purchases were made if I wished. I pointed out that the two items purchased equaled $75 — the exact amount of the gift card — and that the clerk in his store was the one who scratched off the activation code. When I said I’d be looking into the matter further, he decided to call Macy’s gift card fraud department.

He discovered that the card had, indeed, been used fraudulently by someone who had keyed in the right numbers. How did that person get the gift card number and PIN code? Common sense would indicate the culprit had access to store information, and might have been an employee, or in collusion with an employee.

There are numerous ways to scam gift card numbers, ranging from stolen receipts that show the gift card number and value, to copying or scanning unsold gift card numbers and checking websites to see when a card is activated.

An estimated $97.2 billion in gift cards were purchased during the 2010 holiday season, according to research done by the Mercator Advisory Group.

“As with other types of cards, gift cards are not immune to exposure to fraud and theft,” says Beth Charlton, director of issue management and special projects, corporate communications for Macy’s, Inc. “The gift card owner should monitor the balance of the
card regularly to ensure its value.  If an owner suspects a problem, immediately contact the store or store’s customer service center to report any concern.  Owners should always keep a gift card in a secure place.”

The sales supervisor I dealt with immediately gave me a new gift card, apologizing for the inconvenience. Given the prevalence of gift card fraud, I didn’t blame him for looking at me with suspicion at first.

Clearly, retailers don’t want to call attention to this issue because it could cut into their sales, especially during the crucial holiday season. But since stores seem unable to completely outwit gift card thieves, the best advice anyone can heed is “buyer AND user beware.”

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