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As Gift Card Fraud Plagues Holiday Shoppers; Here are Ways to Steer Clear of Such Scams

The $500 gift card, initially intended for a friend, ended up being kept by Miller himself after the friend declined it
Cover Image Source: Pexels
Cover Image Source: Pexels

As the festive season kicks off, a cautionary tale from Montreal serves as a stark reminder for shoppers to exercise vigilance when purchasing gift cards, particularly from third-party retailers. A Montreal resident recently experienced a disconcerting incident involving a Home Depot gift card purchased from a Super C grocery store. The $500 gift card, initially intended for a friend, ended up being kept by Miller himself after the friend declined it. However, when Miller attempted to use the card a few weeks later, he discovered that the $210.58 balance had mysteriously vanished.

The perplexing aspect of this case lies in the fact that the protective scratch-off strip, concealing the card's PIN and password, appeared to be untouched.

Image Source:
Image Source: Pexels

Gift card fraud is a pervasive issue across North America, costing consumers millions of dollars annually. Claudiu Popa, a privacy and cybersecurity consultant, sheds light on the complex ecosystem of gift card distribution. Major retailers often utilize third-party companies to disseminate their cards to various locations, making the security of these cards challenging to control. The vulnerability of gift cards to tampering, coupled with the lack of transparency in transaction details, leaves consumers exposed to potential fraud.

One significant challenge faced by victims of gift card fraud is the difficulty in proving ownership and establishing responsibility when an issue arises. A Toronto-based cybersecurity analyst, emphasizes the absence of clear guidelines on who should take responsibility, whether it's the credit card company, the vendor, the third party, or the individual selling the gift card.

Homeland security Pexels | By Pixabay
Homeland security Pexels | By Pixabay

To address these challenges, experts like Popa propose enhanced legislation in Canada to provide better protection for consumers. While existing federal laws prevent gift cards from expiring and mandate disclosure of associated fees, there is currently no protection against fraud or unauthorized charges. Drawing inspiration from efforts in the United States to include gift cards under the Electronic Fund Transfer Act, experts suggest classifying gift cards in the same category as debit cards. This classification would incentivize distributors and retailers to implement additional security measures, such as chips, which can minimize the risk of tampering.

In Miller's case, after weeks of pursuing answers, Home Depot eventually agreed to reissue a gift card for the remaining balance as a "one-time good faith gesture." But Miller believes that such incidents could be avoided if companies took measures to secure gift cards in the first place, and suggests that cards should be stored securely behind the counter, from where consumers should purchase directly from the retailer.

Image Source: Pexels/ Rachel Claire
Image Source: Pexels/ Rachel Claire

For consumers looking to protect themselves, Popa recommends buying directly from recognized brands, activating the card immediately, and checking the balance regularly. He also suggests opting for digital gift cards when possible, as they offer comprehensive tracking and transaction details, including timestamps. By printing out a screen grab or PDF of the digital gift card and keeping receipts, consumers can have tangible evidence in case of any dispute.