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Growing North Texas Gift Card Scam Cheats CBS11 Reporter Ginger Allen

DALLAS (CBSDFW.COM) - The CBS I-Team digs into corruption, cover-ups and consumer issues, and occasionally falls victim to a crime.

I learned the hard way about a gift card scam hitting North Texas right now.

It wasn't a big amount. It was the principle.

My dad lives in California. This Father's Day, I shipped his gifts – which included a restaurant gift card I purchased at a Dallas grocery store. Because I couldn't be there, I wanted my mom to be able to take him out.

But when they tried to pay at their favorite Outback Steakhouse in California, the manager said the card had a zero balance. My receipt back in Dallas said otherwise.

Needing answers, I tracked the package I sent and the card activity. I quickly learned that while the gift card was sitting at the Los Angeles Postal Distribution Center, someone was sitting back here at an Outback Steakhouse restaurant off Interstate 635 enjoying beer and appetizers compliments of my dad's card.

A manager at the restaurant said the customer had the account number and PIN, but not the actual card. The receipt shows the number had been "keyed" in. The manager told us that was common practice when a customer does not have the card in hand.

An attorney at the Federal Trade Commission's Dallas office explained how the hackers likely got the Outback Steakhouse card number and PIN.

"Some of them will just do it the really old school way," FTC staff attorney M. Hasan Aijaz told me. "They'll go into the establishment, pen and paper and start writing down numbers. In other instances, they figure it out using algorithms and lastly they'll skim it using something similar to a credit card skimmer."

What Aijaz calls "gift card draining," is a fairly new and common technique for thieves, he said.

I visited several Dallas area stores and found that it's easy to see the card number and PIN on Outback Steakhouse gift cards as well other retailers.

Some do take precautions. They may hide the pin under the package. Others completely enclose the card. Some require a scratch off or have a silver zebra-like sticker covering the PIN, but we discovered you can easily buy those stickers by the bunches on line for pennies. The FTC told me thieves simply remove the old sticker, record the number, and replace it with a new one.

This leads to the next question. How do the criminals know when a customer, like me, has bought the card and put money on the card?

"Some of them, depending on the level of sophistication, will go on line and do it by hand, cumbersome," Aijaz said. "Others have realized this is taking too much time and they've developed custom written software... That software will then return the result to hacker and say here are the numbers that have been activated and here's the money that you can now use."

The Retail Gift Card Association told me it's constantly working to stay ahead of the latest fraud. It now recommends retailers use packaging which "cover(s) and protects magnetic strips and gift card PINs."

Otherwise, more people, like my dad, may end up with a gift that never gives.

In a statement, Outback's management told me that the trust customers place in using the restaurant's gift cards is very important to them.

"While we have found this rarely happens, we changed the way we produce gift cards last year to cover the PIN. However, older cards may still be found on shelves," the company said in a written statement. "Of course, if this happens we fully reimburse our customers. We have reminded our restaurant teams only to accept cards physically presented. Gift cards may also be purchased electronically at through our secure website for immediate gift giving."

In my case, the manager at the Dallas Outback Steakhouse gave me store coupons for me to resend to my dad.


§ Avoid buying cards from the front of the display which are easily accessible. Dig to the back where thieves are less likely to tamper with cards.

§ Once you buy a card, immediately change the security code or pin if that is an option.

§ Instead of buying cards from a third party, such as a grocery store, go online to the retailer and ship it directly.

§ Always save the receipt when you buy the card.

§ If you run into trouble with the card, go back to the retailer.

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