Gift all card scams have become common in recent years, including draining scams. The fraudsters behind draining scams use deceptive tactics to siphon gift card funds, leaving victims financially compromised and often emotionally distressed. Consumers should understand the nature of these scams and their warning signs to protect themselves against potential exploitation.
The InComm Payments team prioritizes the security and privacy of their clients. One way to accomplish this is to raise awareness about how gift card scams and teaching people how to prevent themselves from falling victim. Here’s what you need to know about gift card draining scams.
How Gift Card Draining Scams Work
Gift card draining scams typically follow a straightforward process. Initially, scammers acquire gift cards through illegal means, such as theft, deception, or by purchasing them with stolen credit card information. Once they obtain the gift cards, scammers drain their value by transferring funds to other accounts, making online purchases, or selling the cards on secondary markets.
Throughout this process, the scammers often use sophisticated tactics to avoid detection and maximize their illicit gains. The most common tactic is to steal gift cards from stores, copy the card number and security code, and then reseal it and return it to the store. Another person later buys the card and loads funds onto it, which are stolen (or “drained”) by the scammer.
Additionally, scammers often use phishing techniques to trick individuals into providing gift card information or social engineering techniques to manipulate victims into purchasing gift cards and sharing the activation codes.
Strategies to Protect Yourself and Others
The criminals behind gift card draining scams continually adapt their tactics to exploit unsuspecting shoppers. This makes it challenging to understand the warning signs and adopt proactive measures to protect yourself and others. Let’s explore some strategies to defend against gift card draining scams.
Check for Signs of Tampering
When purchasing gift cards, inspect them for any signs of tampering. Ensure that the card is sealed and that the protective cover and tape covering the PIN are intact. If the card lacks a seal or cover, carefully examine it for evidence of tampering, such as scuff marks near the barcode or on the back of the card. Additionally, verify that the PIN on the back is not visible, as this could indicate potential tampering.
Avoid Risky Purchases
Don’t buy gift cards from online auction sites, as users on these platforms couldn’t care less about “terms of use” and are happy to sell counterfeit or stolen cards. While the draw of discounted gift cards may be significant, the risk of receiving fraudulent or compromised cards outweighs the potential savings. Stick to reputable retailers and authorized sellers to minimize the chances of falling victim to gift card scams.
Document Purchases for Protection
After purchasing a gift card, hold on to your receipt and consider taking a photograph of both the card and the receipt. This documentation can serve as evidence if the gift card is compromised or lost. The information on the receipt, coupled with the card’s details, allows you to file a report with the store and/or the gift card company. This can facilitate legal action in cases of fraud or theft.
How Businesses Can Protect Themselves from Draining Scams
Businesses can protect themselves from gift card scams by implementing proactive measures and monitoring systems. Setting thresholds to freeze cards with unusual activity and enabling PINs for balance inquiries can deter fraud. Regular reviews of high-risk and inactive cards and flagging excessive balance inquiries can help with early fraud detection.
Monitoring changes in gift card status and adopting proprietary account number schemes adds layers of security. Additionally, using algorithmic methodologies for mag stripe encryption enhances data protection, safeguarding against potential breaches and unauthorized access. These strategies can be used to collectively bolster the defenses of businesses against gift card scams.
The Impact of Gift Card Draining Scams
Gift card draining scams cause both financial and emotional harm to individuals and businesses. Victims of gift card draining scams often experience substantial financial losses, since funds loaded onto compromised cards are irretrievable once stolen. These losses can range from small amounts to significant sums, depending on the extent of the scam and the value of the cards involved. In many cases, victims are unable to recoup their losses, leading to financial hardship and distress.
In addition to the financial repercussions, gift card draining scams take a considerable emotional toll on victims and businesses alike. Individuals who fall victim to these scams may experience feelings of betrayal, anger, and helplessness. This is understandable; their trust and security have been violated. Businesses face reputational damage and loss of customer confidence, which can impact long-term relationships and brand loyalty.
The psychological impact of these scams can be profound, causing stress, anxiety, and emotional trauma for all parties involved. However, with a little education and a lot of robust defenses, we can avoid victims in the first place. Gift card users should educate themselves, and businesses should educate their employees and their customers about the existence of these scams, how to use these cards responsibly, and what to do if they believe they are the victim of a gift card draining scam.
