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Gift Card Problem Prompts Holiday Season Warning

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    NEWSLETTERS

    In a new gift card scam, thieves take the codes off the back before it's even sold and then swipe the owner's funds after it's activated. Randy Mac reports for the NBC4 News at 6 on Dec. 24, 2014. (Published Wednesday, Dec. 24, 2014)

    You may want to think twice before buying a gift card as a last-minute holiday gift.

    The NBC4 I-Team has learned the cards are especially vulnerable to a crime that could cost you a lot of money.

    One recent victim is Granada Hills businessman Brian Perlman.

    “I spent $1,534 including activation fees,” Perlman said.

    The cards he bought for himself and clients were issued by Vanilla Visa, and sold off a rack at a Burbank CVS store.

    “When I went to go use one of them for a customer event it was denied,” Perlman said. “When my clients tried to use the cards, the same thing happened.”

    Perlman had become the latest victim of a growing problem involving these popular gift cards.

    Investigators say the thieves enter the store, and record the serial number on the backs of cards while they’re still on the rack. The trouble starts when a consumer buys the card and heads to the register.

    “Once it’s activated, you can access the money that’s stored in that card,” said Rigoberto Reyes, Chief Investigator with the L.A. Department of Consumer Affairs.

    Reyes says the can thieves monitor the card's activation status by calling the card issuer and asking for the remaining balance. Some Internet-savvy scammers have even figured out how to track card activity online.

    Then, they act quickly to use the card number to go shopping, either online, or after creating phony identical cards using easy-to-find equipment and cardstock.

    Perlman’s frustration got worse when he reported the problem.

    “When I went back to CVS, CVS said that they activated it and it was a Vanilla VISA problem. When I contacted Vanilla Visa they say that the card was not activated even though my receipt clearly indicated that it was,” Perlman said. “So it seemed to be kind of a feud between the two companies.”

    For answers, the I-Team reached out to Vanilla Visa’s parent company.

    “That’s not how we do business,” said “Skeet” Rolling, Chief Operating Officer of ITC Financial Licenses, Inc. told Mac. “We certainly don’t place any blame on the retailer.”

    And after the I-Team got involved, both companies finally resolved Perlman’s problems.

    “The Vanilla Visa COO has apologized, and CVS has agreed to refund me, (and) offer another $50 gift card as a token for the trouble,” Perlman said. “I hope it works. And hopefully, my story will help others and encourage the companies to improve security,”

    Vanilla Visa told the I-Team it’s working to improve card security to prevent future fraud.

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