Careful Who You Buy Gift Cards From: A Growing Form of Money Laundering
Holiday shoppers need to watch out this year for yet another red flag that might indicate fraud. Gift cards purchased with stolen credit cards have been sold online as a tool for money laundering.
Picture this: Your credit cards are stolen. The thief then uses your credit cards to purchase gift cards from Wal-Mart, Target or any other store. He doesn’t want to actually use those gift cards because they might have been flagged as fraudulently purchased, so he sells them on eBay or Craigslist or any other Web site for a discount off the actual face value of the cards.
Consumers think that they’ve found a hot deal when they purchase a few gift cards at 50 percent of their value, but are shocked to discover that the cards are useless. The original card holder has reported his credit cards stolen, which has subsequently flagged the gift cards. If you fall into this trap, you’ve just put money in a scam artist’s pocket.
The beauty of this scam is that regular consumers with no thought of deception sell gift cards every day. They receive cards from stores where they are unlikely to shop, so rather than letting them go to waste, they sell them at a discount online so they at least walk away with some money they can use. So how can you tell the scam artists from people who just received gifts they didn’t want?
A big red flag is the sale of numerous gift cards at once or over a short period of time. This is a serious indicator that the seller is using stolen credit cards to fund his sales, and you should at least consider that he might be into money laundering. Check out the seller’s past history if you’re using an auction Web site such as eBay, and stay clear of him if most of the previous sales have been gift cards.
Money laundering might also be afoot if you find gift cards for sale that are significantly discounted. Since the seller is using stolen credit cards, he wants to dump the gift cards as quickly as possible. To facilitate the sales, he might mark them down by as much as 75 percent; why would a legitimate seller take that much of a hit?
This holiday season, you might be better off paying full price for gift cards at individual retailers rather than purchasing them online. Stolen credit cards are a serious problem in this day and age, and you don’t want to help money-laundering scam artists — even unwittingly — to line their pockets.
See also: Online Resale of Gift Cards Raises Fraud Alarms, ABC News
