Gift Card Scams: How to Spot Them, How to Avoid Being a Victim

Gift cards aren't just popular with exasperated holiday shoppers puzzling over what to buy Aunt Gertrude. They're also a gift to scam artists.

There's plenty of pickings. The gift card market grew to $97.2 billion in 2010, up 12 percent from a year earlier, according to Brent Watters, senior analyst for prepaid services at Mercator Advisory Group, a Massachusetts company that tracks the consumer payments industry. This holiday season, according to an October 2011 survey by the National Retail Federation, 58 percent of shoppers said they'd like to receive a gift card.
The cards are attractive targets for fraud because, unlike credit or debit cards, there's no identifying name attached to them -- only strings of numbers, says Steve Weisman, author of "The Truth About Avoiding Scams" and a legal professor at Bentley University. They're also relatively easy to pull off.
Most commonly, thieves case racks of gift cards in stores, writing down the identifying numbers or using a scanner to lift information from their magnetic strips, Weisman said. Armed with data, they head home to their computers and wait for customers to buy the cards. They repeatedly check websites that display gift card balances, which tell them when the card is activated. As soon as it's activated, they spend the balance in an online shopping spree.

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Gift Card Scams: How To Spot Them, How To Avoid Being A Victim | Fox Business