
Richard Zelinka from Alhambra often sends gift cards to his sister. But last Christmas, he told the I-Team how things started going wrong.
“She called me one time and said that the last cards I sent had money taken out of them,” he said.
Three Vanilla Visa gift cards, totalling $900, had been completely wiped out.
“I was just trying to figure out how this could happen,” said Zelinka.
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The analysts at WalletHub, a personal finance site, explained how it often happens in some cases. Scammers discreetly break into gift card packaging while the cards are still on the store rack. They steal the card number and any PIN information they might need, and then repackage the card. They plug these numbers into their computers, and a special software alerts them when a card is purchased and activated.
“Once they know something’s activated, they can then use it at their own leisure. And they’ll probably use it right away before someone else can,” said WalletHub’s Jill Gonzalez.
In fact, just recently, the Sacramento county sheriff’s department arrested a man in a sting they’re calling Operation Bad Elf. They say he was trying to steal numbers from 5,000 gift cards, many of them from a Target store.
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The I-Team asked Target how it keeps its gift cards secure. In a statement, it said it uses a multi-layered approach, which includes employing a cyber fraud team and regularly inspecting cards for any physical signs of tampering.
San Francisco city attorney David Chui is also cracking down on gift card security. He’s suing Incomm Financial Services, the provider of Vanilla Visa cards, citing the I-Team’s story about Richard in the lawsuit.
“We want Incomm to provide restitution to all the consumers they’ve bilked,” he said.
Chui said the Vanilla Visa cards are poorly packaged, making it easy for crooks to steal the information. And he said the company often doesn’t refund victims, and instead accuses them of draining the cards.
“I think what has made the conduct of Incomm so egregious is how they have reacted when consumers do bring these issues to them, and clearly what appear to be lies that they tell consumers who are trying to get some relief,” he said.
In a statement to the I-Team, Incomm said it doesn’t comment on active litigation. But it said it devotes tremendous resources to protecting cardholders from fraud. It also said it hasn’t found other packaging techniques that are more secure.
As for Zelinka, last year Incomm sent him new gift cards totalling $900.
“That’s a big chunk of change for anybody. It meant the world. And I was so grateful,” he said.
Tips when buying and using gift cards:
- Avoid purchasing cards from big kiosks where it’s easy for a scammer to tamper with them. Instead, buy cards that are locked up or behind the cashier.
- Send a gift card electronically, through email or text, instead of gifting a physical card.
- Wait to activate the card until right before you make a purchase.