Beware: Don’t get scammed on gift cards this Christmas season

Gift cards are so unbelievably popular at Christmas because well you got people on your list you don?€™t quite know what to buy them. so you go get them a gift card right? Consumer Adviser Clark Howard explains.

Gift cards are an easy way to whittle down your shopping list, but the Better Business Bureau warns that they can also be the target of scammers.

Last year, a new scam emerged in which hackers removed gift cards off racks in stores where they are often kept out in the open and used a magnetic strip reader to scan account numbers. They scratch off the material on the back to get the PIN number and apply a replacement strip. Unsuspecting consumers then buy the cards and are none the wiser.

After the card is loaded with cash, the thief gets an alert that funds are on the card and then goes on a shopping spree, draining the card balance, or programs a new blank card that can be used in stores. Card reader/writer encoders — which conveniently come with blank credit cards — are available on online for as little as $85.

“Before purchasing a gift card, look carefully at the packaging for any tears, wrinkles, or other indications of tampering, and see if the PIN is exposed,” the BBB warned. “If anything looks suspicious, it’s probably best to take a different card, and turn in the compromised card to the store’s customer service desk.”

How can you avoid this and other potential pitfalls when dealing with gift cards this year? You can protect yourself. The Federal Trade Commission and the FBI Internet Crime Complaint Center offer these tips when buying, giving and using gift cards.

  • Check cards for an expiration date or fees and note any terms and conditions.
  • Use gift cards as soon as possible. We often lose or forget about them.
  • Buy gift cards from trusted sources. Avoid online auction sites, as these cards may be counterfeit or may have been obtained fraudulently.
  • Read the fine print. Is there a fee to buy the card? Are there shipping and handling fees for cards bought by phone or online? Will any fees be deducted from the card after it is purchased?
  • Inspect the card. Verify that no protective stickers have been removed or tampered with, and that the codes on the back of the card haven't been scratched off to reveal the PIN. Report damaged cards to the store manager.
  • Attach the original receipt to the gift card in case it is lost or stolen.
  • Before you buy, consider the financial condition of the retailer or restaurant. If the establishment goes out of business, you can be left with nothing. Gift cards from companies that file for bankruptcy also may be worth less.
  • If it appears that a card has expired or fees have been deducted, contact the company that issued the card and ask if the card can be honored or if fees can be reversed.
  • Treat gift cards like cash. If it is lost or stolen, report it to the issuer. Some will not replace cards while others will for a fee.
  • If you purchase or sell gift cards on the secondary market, check website reviews and only buy from or sell to reputable dealers.
  • If you do get scammed, report it to the FTC at or at 877-382-4357.

Find more safety tips at and from the Retail Gift Card Association at