‘There's no money on it': What's behind vanishing gift card balances

If you’re picking out a gift card to give, law enforcement warns consumers to be aware of a scheme targeting card balances. Police from Plano, Texas to Sacramento, California tell NBC 5 Responds law enforcement seized thousands of gift cards in gift card draining investigations.

'THERE WAS NO MONEY ON IT'

While assembling a care package for a friend with an injured child, Nicole Bruns of Prosper included a $100 DoorDash gift card.

After dropping off the gift, Bruns said the family called. “Heard back about an hour later from the family that their gift card wasn't working," she said. "There was no money on it.”

Bruns called Kroger where she bought the card. Bruns said it referred her to DoorDash which sent her back to Kroger.

“I got pretty frustrated that nobody wanted to help out,” Bruns said.

When NBC 5 Responds contacted Kroger, it refunded Bruns and added money to her rewards card as a gesture of goodwill. Bruns said her chief concern wasn’t the money.

“I just don’t want this to happen to other people,” Bruns said. “Kroger has a huge gift card display, tons of gift cards on there. This could be happening over and over and over again.”

Larry Vining of Alvarado had just brought a Home Depot gift card home when he felt an odd seam in the package.

“Uh-oh, there's a problem. It's been drained, I know it,” Vining recalled. “I took it apart, looked at it and sure enough, nothing there when I called.”

Aaron Bracken said he and his wife discovered a problem after buying three Amazon gift cards in different amounts.

Bracken said, “She thought, well, I'm going to call and make sure these have the correct balances on them before I give them as gifts. She was surprised to learn, through the automated system, the cards had a zero balance on them.”

Each consumer told us they bought the cards in person. They picked the cards up at display racks at area Kroger stores. After the consumers contacted NBC 5 Responds, each confirmed Kroger provided refunds.

Kroger told NBC 5, in part, that its Dallas Division processes hundreds of gift card transactions daily and fraud is rare. It noted multiple strategies to protect customers including signs at gift card displays, online education and associate training in fraud prevention. Kroger said customers with questions can contact the Customer Relations Center at 1-866-544-8062.

We asked DoorDash about Bruns’ experience. It said if a card isn’t working, first contact the store where you bought it. Inspect gift cards before purchasing. Customers have the option to purchase digital gift cards from its website.

Vining said he didn’t reach out to Home Depot for help with his card. We asked the company what other customers should do in a similar situation. Home Depot told NBC 5 Responds it does its best to protect customers. If they are victims of this type of crime, the store works to refund money on the purchased gift card.

Amazon shared this web page with tips for consumers. It told NBC 5 that customers should examine gift cards when shopping in stores or a third-party location for any signs someone opened or attempted to open the package. Amazon said customers should contact its customer service for redeeming issues.

Each consumer told us they noticed signs of tampering after buying the card. Vining said he tried to be on alert when shopping, even reaching for a card tucked back on the rack.

“I never would grab the first one,” Vining said. “I'd grab a handful and get one that's eight or nine back.”

THOUSANDS OF TAMPERED CARDS SEIZED BY POLICE

We don’t know exactly how each of the consumer’s gift cards was drained. We do know they’re not alone.

In North Texas and nationwide, our NBC and Telemundo consumer teams have logged dozens of complaints about vanishing gift cards. We counted 186 since 2016. Of them, 101 reported signs of tampering on the physical cards.

This spring, Plano Police announced law enforcement seized more than 4,100 “tampered” gift cards for brands like Apple, Sephora and Foot Locker. Foot Locker said it wasn’t able to comment when we reached out. We haven’t heard back from Apple or Sephora. Plano said investigators arrested two people. Court records show they face a charge of “unlawful use of a criminal instrument”.

In Plano, Detective Jerry Minton sat down with NBC 5 Responds to talk about gift card tampering.

“The persons that are doing this are better at it than they used to be. They're taking their time,” said Minton.

Generally, Minton said gift card draining involves crooks who take gift cards off store racks, copy card numbers and security codes and then put the cards back. When a consumer loads money onto a compromised gift card, a thief drains the value. Using computer programming, Minton said draining can happen fast.

“As soon as they become active, those bots are draining the funds on those accounts,” explained Minton.

In our interview, police said investigators can’t share evidence in an ongoing case. Minton showed us examples of tampering on cards, provided by brands to law enforcement for training. He explained signs of tampering may look subtle – like a smooth barcode, where there should be little ridges. There may be scuff marks around the pin code where someone replaced the scratch-off material.

Minton pointed to an example, saying, “They found replacement stickers, probably online, and put it back over the original label - covering up the barcode again.”

Minton pointed to details gift card makers add to packages, like tape that reflects multiple colors under the light.

“On the ones that are counterfeit, all the circles, the little dots on the inside are silver,” Minton explained while holding up another sticker that mimics the look.

Minton adds, “It's not a one-off. It's not just a Plano situation. It is a worldwide situation.”

WIDE-REACHING INVESTIGATIONS INTO GIFT CARD TAMPERING

Our NBC Responds team in the California Bay Area covered an investigation in Sacramento where deputies said they arrested a man person putting gift cards on a store rack in December. Deputies said the suspect had 5,000 more gift cards in his vehicle.

Since then, the Sacramento County Sheriff’s Office said it believes the cases are connected. It pointed to a wider law enforcement operation called “Red Hook” that touches just about every major city in every state in the U.S.

“Gift card tampering is not something that’s new. We’re familiar with the idea of it. To see it on that scale, to see it at that level of organization and then to recognize it’s only one piece of this much larger puzzle, it’s overwhelming,” said Detective Andy Cater with the Sacramento County Sheriff’s Office.

According to Cater, investigators believe an organized criminal network is sending people into stores to take gift cards. They move the cards to an undisclosed location where the card numbers and security codes are stolen. The cards are reassembled to hide signs of tampering and crooks put the cards back onto store shelves.

Thieves monitor the account numbers. If a consumer loads money onto a compromised gift card, thieves drain the balance.

Court records in Sacramento show the suspect in the California case has not entered a plea. After an early appearance in court, Responds asked the man’s court-appointed attorney about the Target gift cards. The attorney told our colleagues that, in part, having the cards does not indicate something illegal occurred. The suspect’s new attorney hasn’t answered our team’s most recent questions.

Target told us, in part, “We are aware of the prevalence of gift card tampering and take this issue very seriously.”

Target said it is actively addressing the problem through a multi-layered approach, including store teams inspecting cards for physical signs of tampering. It also noted, “Gift card tampering is an industry-wide issue.” To learn more, Target said customers can visit its security and fraud page. 

GIFT CARDS ARE 'VIRTUALLY UNTRACEABLE' CASH

We wanted to know: why gift cards?

The special agent in charge of the FBI field office in San Francisco told Responds reporter Chris Chmura gift cards offer criminals a way to get untraceable cash.

Special Agent in Charge Robert Tripp said thieves, overseas, consolidate and sell compromised accounts for less than face value. Ultimately, luring a U.S. buyer who pays cash for a discounted gift card, unaware the balance was stolen.

“If that passes through two, three, four hands, it’s virtually untraceable,” said Tripp.

WHAT YOU CAN DO TO AVOID DRAINED GIFT CARDS

To reduce the odds of buying a tampered card, Plano Detective Minton said consider one that is kept locked up at the store. Or order an electronic gift card to send directly to the recipient’s email.

If you end up with a drained gift card, Plano police recommend consumers file a report with the law enforcement agency where the consumer purchased the card. Also, report it on the internet crimes website.

The Retail Gift Card Association recommends consumers report suspected gift card fraud to www.reportfraud.ftc.gov and gcfraud@hsi.dhs.gov.

The RGCA said consumers should contact both the store where they bought the card and the brand on the gift card. On certain prepaid gift cards, the kind accepted by many stores, call the company listed on the back of the card.

When you’re shopping, RCGA said to make sure the activation receipt matches the gift numbers activated and save your receipts. Check the balance right away. You may even consider opening cards in front of a store cashier at checkout to look for signs of tampering. If you suspect a card is tampered with, don’t put it back on the rack, give it to a store employee.

The RCGA also added, “Our industry continues to invest in fresh, safe gift card packaging to help protect shoppers from criminals. In addition to developing tamper-resistant packaging, the industry employs a variety of techniques during card production and along the supply chain to protect shoppers.” Consumers can read more here.

Bruns said she was glad she didn’t toss her gift card activation receipt.

“Those little bitty receipts you get from the grocery store: put them in an envelope somewhere and just hang on to them just in case,” Bruns advised.

Another idea? Keep the lines of communication open when giving gift cards.

“I was so grateful this family reached out to us to tell us,” Bruns said.

NBC 5 Responds is committed to researching your concerns and recovering your money. Our goal is to get you answers and, if possible, solutions and a resolution. Call us at 844-5RESPND (844-573-7763) or fill out our customer complaint form.