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I-Team: Former Insider Calls On Lawmakers To Help Stop Gift Card Fraud

NORTH TEXAS (CBSDFW.COM) — Gift cards are the most popular gift of all time, but the I-Team has been warning you about a major fraud problem with them since 2018. And now, another North Texan and an industry insider have reached out to us complaining about the growing problem.

"It just coming back declined," said Robert Adale Davis, a traveling musician who frequently performs in Dallas.

In June, he walked into a Kroger store on Forest Lane, bought a $130 Visa Debit gift card, and went to the parking lot to activate it. "I knew I had just given them $130," Davis said but the card had a zero balance.

Davis says the store told him to call the Kroger fraud department, Visa, and the police, but he got nowhere, and he got no money back.

And then he called the I-Team.

"They got paid even though it's a scam," he said

In 2018, CBS 11 I-Team investigator Ginger Allen became an unwitting victim herself. She bought a restaurant gift card for her father who lives in California. When he tried to use it, it had a zero balance. She found out that the thieves at a Dallas location had the number and asked the restaurant to key it in. They then proceeded to enjoy appetizers and drinks using that card!

"I paid $100," said Truman Bradshaw. The North Texan told us in a December 2019 I-Team Investigation that he bought an Amazon gift card at a local CVS. He says, "It was rejected immediately." His card had been drained before he could ever redeem it.

The I-Team has repeatedly reported on this. A security expert even showed us how easily crooks remove the cards from kiosks, record the numbers, and then return them to the racks. They eventually drain the cards leaving them with a zero balance.

The crooks do it all with a card reader/writer, a laptop, and some simple math.

"All the ones on the store shelve are compromised," said William Caput. "They should just be destroyed."

The I-Team will not get into exactly how it's done, but let's just say you do not have to be a cyber expert. We watched our expert transfer the money to a separate card in about two minutes.

"We're spending $150 billion a year on gift cards," says former industry insider Shannon Greer. Greer contacted the I-Team after seeing our investigations. "Yet 20-30% of those are defrauded. That's quite a chunk of $150 billion."

For seven years, Greer worked for a major gift card manufacturer helping big box and small mom and pop retailers design their cards.

"The merchants will put so much money into making a card but no money in the security of the card." Greer says she was the person who asked the retailers if they would like to add the extra security features onto their cards.

"We would go back and say, 'Are you going to put a security sticker on here? Are you going put a scratch off on here?' "

She said they were typically quick to respond. " 'Oh no, we don't need that, that's not in our budget.' "

Stickers and scratch offs are security options Greer offered, but she says even those are not always best. Thieves remove and replace them with products the I-Team discovered you can easily buy online for pennies.

The security feature Greer highly recommended was a complete card enclosure which hid the numbers and made it impossible to remove the card without making tampering obvious.

She says the problem is all of the security feature options cost retailers anywhere from two- to 12-cents more a card.

The I-Team asked her how often retailers refused to add those extra features. "I would say 95% of times."

Greer says retailers have no incentive to pay the extra costs "because there is no way to track the crime." Greer emphasized that retailers are not reporting the number of times they receive reports about cards with zero balances.

"Retailers are never going to tell how many cards they've had stolen."

The insider says this crime is happening every day. "I would say multiple times a day," said Greer. "Lawmakers need to look at it."

She says legislation should require (1) completely enclosing gift cards, (2) using pins to activate them, and/or (3) selling the cards out of vending machines rather than open kiosks.

Changes would be music to the ears of Robert Adale Davis, who's now been waiting to get his money back for four months.

"I want my money back," says Davis. "I just want the money back!"

Since July, the I-Team has been asking Visa and Kroger if they will reimburse Davis. They keep telling us they are checking into it, but Davis says he still has not heard from either of them.

In our past stories, Kroger, Amazon, CVS and Outback Restaurant all refunded consumers as soon as we reached out.


  • Reach to the very back of the shelves in the kiosks to get your cards
  • Consider buying only those which are completely encased
  • If you buy cards with stickers or scratch offs, look closely for tampering
  • Consider only buying cards from retailers which keep them behind the counter
  • Most importantly, save your receipt in case you have to fight


What is the latest development with this fraud?

This type of fraud where gift card balances are drained before people redeem the cards can happen in-store when criminals steal gift card numbers and PINs, or online when gift card information is not safely secured or is shared with unknown parties. Because of the pandemic, more people have been shopping online and as a result, we have seen more instances of digital gift card fraud than before.

Although crime is a very small part of the gift card industry's total volume, fraudsters continually evolve; we actively help people recognize the signs of a scam via our tips for safe gift card use.

Is your association still pushing retailers to change their packaging to improve tampering?

Yes, we regularly advise our members and other industry stakeholders on safe gift card packaging and storage techniques. We also encourage our members to safeguard their programs and customers using fraud prevention tactics such as training cashiers about how to inspect gift cards for tampering and recognize suspicious behavior, and creating signage to educate shoppers about gift card fraud.

The RGCA actively monitors fraud trends to keep our members and different members of the gift card industry ecosystem (e.g., law enforcement, regulators) apprised of emerging or changing fraudster strategy. We are dedicated to fighting fraud by continually sharing our collective knowledge, pooling resources and expertise, and collaborating to defend our customers and businesses from criminal activity.

What else can your association tell us about this crime?

This type of fraud is mostly successful when it is perpetrated against consumers who are vulnerable or unaware of how gift cards work. We are actively helping educate our members, shoppers, sales associates, and law enforcement on how to spot this type of fraud and quash it.

The efforts we have been supporting to drive awareness and fight fraud have been working, and we are seeing more businesses expand their fraud-fighting efforts every day. Partnerships between the retail gift card industry and authorities are strengthening so incidents are more quickly reported, more cases are being tried and won against perpetrators, and information is being shared to help people stay ahead of fraudsters.

Together, we have more and better resources to communicate with and we are gaining traction on bringing the ecosystem of retailers, consumers, authorities, and regulators together to combat fraud. Our organization regularly meets with special interest groups and legislative/regulatory bodies; we are seeing real traction in fight against fraud and are helping retailers expand their efforts to protect shoppers.

What can consumers and retailers do to help stop it?

Educate themselves, on both sides. From a consumer standpoint, it's important to know what gift cards can be used for (and what they cannot), that gift cards should not be used for unsolicited requests for payment online or over the phone, best practices for buying/storing/using gift cards, and signs of gift card tampering. For example, you can't pay back taxes to the IRS or bail someone out of jail with gift cards and gift card numbers and PINs should not be shared with others—even online.

We advocate for retailers to educate sales associates to spot and prevent fraud. For instance, if a shopper seems to be uncomfortable and buying an excessive number of cards or loading a large amount of money onto a card, that is a red flag. Sales associates should also inspect cards for tampering before loading funds onto them to avoid balance draining.

Stopping fraud is a group effort and retailers are only one of the entities within the larger gift card industry ecosystem. In addition to education, consumers and retailers need to know that authorities are doing what they can to protect people and aggressively prosecute criminals. If you think you've been scammed, contact the FTC at or via this toll-free number: 877-FTC-HELP.

We've visited several "gift card malls." Overall- it seems as though most retailers are still using stickers, scratch offs and/or packaging which does not hide or partially hides the bar codes and numbers; however, we did find a handful of retailers which appear to have changed their packaging from years ago when we first started looking into this. Is it correct to say more retailers are completely enclosing their cards making it far more difficult to tamper with them? Please explain and/or weigh in on what your association is finding.

Retailers are continually implementing new safety measures to protect shoppers—including using the latest gift card packaging options available. Additionally, we encourage members and other industry stakeholders to educate consumers about other types of safeguards they should consider, like safely storing digital gift card information and not sharing gift card numbers or PINs with third parties.

We found some gift card malls have signs with "scam alerts" posted near them; however, the warning is about buying gift cards to pay "fines, taxes, fees," etc. Do you know of any place warning about the fraud we are discussing, and would you recommend it?

The RGCA does not comment on specific retailers' practices, policies, and initiatives; however, many of our members do warn consumers about gift card draining in-store and on their websites.

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