When Denise Brown peruses the tightly packed gift card display at her CVS in New York City's Harlem neighborhood, she sees the perfect present for her grandson: a Sony PlayStation gift card. Others see these gift card displays as easy money in one of the costliest and most common consumer scams: card draining.
Scammers drain a gift card by obtaining the bar code, CVV number, PIN number or activation code from beneath the cardboard packaging. They reseal the card, wait for a consumer to buy it and load it with money, and then spend the balance before the consumer can. In 2023, card draining and other gift card-related fraud made up $217 million of the record-high $10 billion in money lost from scams nationwide, according to the Federal Trade Commission, reports Stateline.
State attorneys general and legislatures are trying to combat gift card scams with consumer alerts, arrests and warning signs on store displays. Some are telling gift card makers how to package their products. Retailers and card manufacturers are pushing back, saying the micromanaging isn’t necessary and would hurt small businesses. Gift cards, which are easy to find at almost any big box retailer, are a popular gift for holidays, birthdays and graduations. Scammers love gift cards because they’re money that can be easily moved, often irreversibly, with few protections for consumers. Card draining is only one way that scammers capitalize on the popularity of gift cards. Some fraudsters, instead of grabbing information from gift card displays, masquerade as government officials or a friend in an emergency and intimidate victims into buying gift cards and giving them the card numbers and PINs. According to a 2022 AARP survey, 34% of U.S. adults said they or someone they know had been targeted by scams seeking payment by gift card.
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