Maryland is the first state in the country to pass a law to stop gift card draining, a scam that is becoming more popular.
The Gift Card Scams Prevention Act of 2024, which was just signed by Gov. Wes Moore of Maryland, says that store-bought gift cards must come in safe packaging so that thieves can’t get the numbers without permission. Online stores that sell gift cards now have to register them with the Office of the Attorney General’s Division of Consumer Protection. They also have to teach their workers how to spot gift card fraud.
Criminals pull these kinds of scams by stealing gift cards, getting the card numbers, and then draining the cards’ balances. They then put the cards back on shop shelves so that customers can’t use them.
Experts say that the money on gift cards is at risk because the barcodes and PINs, which are hidden by a scratch-off sticker, can be seen if the cards are not properly packaged. It’s easy for thieves to take off the sticker that hides the PIN and put on a new one, making the card look like it hasn’t been used.
The Federal Trade Commission shared data in May that showed gift card scams caused $228 million in losses in 2023. These scams got worse during the pandemic. A story from ProPublica says that this kind of fraud was mostly used by Chinese crime rings to get money. A task group has been set up by the U.S. Department of Homeland Security to stop card draining.
According to a report from AARP in 2022, about a quarter of U.S. consumers have given or gotten empty gift cards.