Gift Card ‘Draining’ Is the New Theft. Here’s How to Protect Your Money.

Gift cards take the guesswork out of gifting, making them a common go-to for many shoppers. But these popular gifts have also become a way for fraudsters to steal money, according to the Better Business Bureau (BBB).

The scam is called “gift card draining,” and it can be hard to spot, especially if you don’t know the signs to watch for.

Unlike a credit card charge that’s relatively easy to dispute, gift card funds are treated much like cash. Once the money is gone, it’s usually gone for good.

Scammers will visit gift card displays in stores to tamper with and record card information and hidden security codes from cards that are still on the rack. The scammers then use software to monitor those compromised cards.

Once the card is purchased and activated, the thief is alerted. The scammer can then siphon off the funds and spend the balance before the buyer even gets home.

To stay safe, give the card a thorough physical inspection to check for tampering or stickers that could cover barcodes. If the security film or packaging looks like it has been torn, or if it’s wrinkled, don’t purchase it.

It’s also wise to pick a card from the middle of the stack rather than the one right in front, says the BBB.

Next, consider where in the store the cards are located. Cards on high-traffic, unmonitored racks near entrances are much easier for thieves to tamper with than those kept behind a customer service desk or a pharmacy counter.

For those who are comfortable with technology, buying digital gift cards directly from a retailer’s official website is often the safest route. This bypasses the risk of physical tampering. Just be sure you’re buying from the actual merchant’s website and from a trusted retailer.

If you buy in person, keep the paper receipt. If a recipient finds a zero balance, that receipt is the only evidence available to help the issuer track down the missing funds.

If a card is compromised, contact the card issuer right away. While it isn’t always possible to get money back, some companies can freeze the funds if they haven’t been spent yet. Reporting these incidents to the BBB’s Scam Tracker also helps warn others about which local stores are being targeted.

For more on staying safe from scammers, read our recent reporting in “This Social Media Scam Is the ‘Top Threat for the General Public,’ Experts Say.”