By Darren Wittko
Last summer I planned a Disney Cruise for my family. I purchased several gift cards at BJ’s Wholesale Club and saved about 5% on $3,000 worth of gift cards - close to $150. Not a big savings all things considered but still it seemed worth it at the time. A few days later I went to apply payment to our reservation and discovered that six of the gift cards, each with $100 on them, had a zero balance. I immediately went back to BJ’s figuring they hadn’t been activated properly. After a lot of arguing with the store manager, and later Disney, it was determined my cards had already been redeemed - I was scammed! So how did this happen?
There have been numerous scams reported with gift cards, not just with Disney, and according to the FBI, scams are on the rise and getting more sophisticated.
As a Disney travel planner, I've had 2 clients who were scammed as well. It’s a nightmare to solve the problem and there’s no guarantee you’ll get your funds back. In my case, it took multiple phone calls, visits to the store, making photocopies and writing letters and eventually I was able to get some of the funds back through an insurance claim. But it took several weeks for this to happen.
The More Simple Scam
There are numerous scams the fraudsters use to gain gift card numbers, many are pretty high tech. But the most simplest method is just taking the cards off the rack in the store. These are the cards that are accessible to everyone. The scammer writes down the gift card numbers, and scratches off the security strip on the back of the cards to get the security codes.
He then puts replacement strips over the security codes and then sneaks them back into the store. Replacement strips are available online from sites like Ebay.
Later, after you buy one of those cards and load money onto it, the hacker gets an instant alert that tells him that the funds have been loaded onto the card. According to the FBI, the scammer knows as soon as someone activates the card, because they use automated software that periodically checks the card balance via the internet, this is called pinging. Or if he’s a low tech thief, he just checks the gift card website everyday until he sees funds have been added.
What does the scammer do with the gift card numbers? He can sell the cards to companies who purchase gift cards for a reduced rate, such as cardpool.com and raise.com. For example, one company might offer $75 on a $100 gift card. But to the scammer, that's an easy profit of $75. Or the scammer may launder the money through online classified sites like Craigslist for legitimate products they purchased from the Disney Store.
How to Protect Yourself
- Buy gift cards online directly from the retailer. Criminals don't have easy access to those cards. Buy online especially if you're purchasing a high-value gift card.
- Don't buy in-store racked cards with easily accessible numbers and PINs. If you buy in a retail store, look for gift cards kept behind the counter or in well-sealed packaging.
- If possible, change the security code as soon as you buy the card. Register the card when you get home, change the PIN, and educate the recipient about what you did and why he or she should not delay in using the card.
- If you are purchasing numerous gift cards, consolidate them down to one card as soon as possible. With Disney Gift Cards, you can transfer as much as $1,000 onto one card. And be sure to redeem that card as soon as possible!