Gift cards are one of the more valuable and useful things you can give to someone who is affected by a chronic and/or life threatening condition. Unfortunately, there are more and more acts of gift card fraud being committed.
Gift cards work essentially the same as credit cards with a mag stripe—the gift card number is printed on the card for manual key entry and is also encoded on a mag stripe on the back of the card. The mag stripe number is plain text and can be read with a mag stripe reader purchased for $15 from eBay or an electronics store. Some criminals will write the number down.
This type of fraud is fairly low-level and does not result in a huge loss to the merchant, but is quite a shock to the customer when the recipient of a gift card tries to redeem it and finds that the balance is zero.
To avoid giving a card that has been hacked, do the following:
• Purchase cards from a reputable merchant. It’s best if the cards are stored behind the counter or locked in a cabinet.
• Avoid buying gift cards from online auction sites, because the cards may be counterfeit or may have been obtained fraudulently.
• Inspect the card before you buy it. Verify that none of the protective stickers have been removed. Make sure that the codes on the back of the card haven't been scratched off to reveal a PIN number. Report any damaged cards to the store selling the cards.
• Give the recipient your original receipt so they can verify the card's purchase in case it is lost or stolen.
• Consider an electronic gift card, which allows the user to upload to their smart phone and avoids the problem of loosing the card. It also allows you to write a personal note in the e-mail.
For more tips Check out the Federal Trade Commission’s Consumer Information Gift Cards site.