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ConsumerWatch: Scammers Finding New Ways To Target Gift Cards

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(Joe Raedle/Getty Images)

(Joe Raedle/Getty Images)

(KPIX 5) – Consumers may want to think twice before purchasing gift cards. A new scam proves that crooks are getting more sophisticated and the old protections just aren’t working any more.

When Bryce Martens of Foster City purchased a Target gift card for his son at Safeway, he did exactly what the retailer advises you do to protect from fraud; He kept the activation receipt and checked to make sure the silver security panel on the back had not been tampered with.

But when his son tried to redeem the gift card on his smart phone app he discovered that the numbers underneath the silver security panel were missing and the card had already been used.

According to Captain Joe Pierucci of the Foster City Police Department, it’s a new form of gift card fraud that is occurring across the country. In the Marten’s case, the card “was most likely in the store for a period of time, stolen, compromised, and then placed back in the store by the unknown suspect,” said Pierucci.

Nationwide, law enforcement believes Crooks have figured out a way to replicate the silver security panel on gift cards so consumers have no way of knowing that it has been tampered with or used. Once the unsuspecting consumer activates the card, the scamsters spend the money via mobile app or online before the consumer has a chance to use it.

In the Martens case, Target and Safeway told police that the card had already been used but that there was no way to track who used it. In response, police are calling on retailers to remove the cards from public access and put them behind the customer service counter to ensure they aren’t compromised or removed by thieves.

In a statement, Safeway said it has no intention of removing the cards as its research shows “consumers shop the gift card mall on average for over 2 minutes (very high for a grocery category) and they enjoy the wide variety and selection of cards available. Removing the cards so consumers cannot browse and shop all the cards easily is not good customer service.”

The Martens have learned it may be best to avoid buying unsecured gift cards all together, because not only did the silver security panel failed them, but it turned out keeping the activation receipt, a Safeway suggestion, was pointless as well.

“I went back to the store with the gift receipt and they told me that they were not authorized to issue refunds or exchanges on gift cards,” said Martens.

After the Martens contacted ConsumerWatch, Target agreed to replace the card and Safeway gave them a $20 dollar gift card for their trouble. Safeway says “ If a customer does experience a problem and the store is unable to solve the issue, we suggest the consumer call the store’s customer service number and they will contact Blackhawk Network. Blackhawk will then work with the customer, the retailer and the content partner to resolve the issue as well as notify law enforcement if needed.”

Blackhawk is the division of Safeway that manufactures gift cards sold at retailers nationwide.

See Blackhawk’s full statement below:

Blackhawk Network Response

April 25, 2013

Blackhawk Network is committed to providing our customers with the best possible experience and we take the security of our gift cards very seriously. We work closely with our partners to develop quality packaging and to do everything possible to protect against any potential fraud. We have found this issue to affect a very small fraction of our millions of cards but if an issue does arise, we work closely with law enforcement to address the problem and do everything we can to make the customer whole.

(Copyright 2013 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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