By Sarah Krouse
Holly Kay bought eight $1,000 Macy's gift cards at a California
mall because a scammer told her to on the Saturday before
Thanksgiving. Forty minutes later, she bought $13,000 more in gift
cards at that store.
The ease with which Ms. Kay was able to complete those purchases
underscores the growing popularity of gift cards among scammers
seeking quick, hard-to-trace ways to take money from their
Buying multiple gift cards is often easier than initiating a
wire transfer, because the cards are easily purchased and the
numbers can be sent instantly by phone or text message to a
fraudster who might otherwise have to wait for a large bank
transaction to clear, law-enforcement officials say.
The gift cards Ms. Kay, 68 years old, purchased at Macy's Inc.
were among nearly 120 that she bought from several retailers in one
week, as part of a scam in which a fraudster told her she was
helping catch a hacker who had compromised her home computer.
At the fraudster's direction, she also spent $19,000 in one hour
on gift cards at a Nordstrom store. The scammer remained on the
phone with her for most of the transactions and at times had remote
control of her computer, coaching her on how to answer cashier
questions about why she was buying the gift cards.
Gift cards sold by large retailers are increasingly used by
scammers in all flavors of fraud, including robocallers
impersonating government officials or online criminals pretending
to be a person's employer, law-enforcement officials say. How
companies respond to scammers' embrace of their gift cards varies
The Financial Crimes Enforcement Network, part of the Treasury
Department, has rules aimed at limiting sales of more than $10,000
in gift cards to any one person on the same day unless a retailer
has systems in place to flag suspect transactions.
Still, as in Ms. Kay's case, purchases at times bypass that
A Macy's spokeswoman said it allows sales of more than $10,000
in gift cards to a customer in a single day, but has "a robust
anti-money laundering program in place." The company is working to
enhance awareness for customers about scam attempts and has
bolstered scam-awareness training for managers, she added.
A Nordstrom Inc. spokeswoman said the retailer has controls and
policies in place to limit gift-card sales to $2,000 per card and
$10,000 per customer each day and that taking care of customers is
its priority. "We're sorry to hear this happened to this customer.
We take these situations seriously and are working with our teams
to look into it," she said.
In all, Ms. Kay purchased $119,000 in gift cards at the
direction of scammers around Thanksgiving, she said.
JPMorgan Chase & Co., which issued the debit and credit
cards Ms. Kay used to pay for most of the gift cards, sent her
three separate emails about suspect transactions on Nov. 23, and
all were verified, a bank spokesman said. Ms. Kay says she has no
record of the emails. Chase reimbursed Ms. Kay for $115,000, the
amount she lost using her debit and credit cards from the bank.
Each retailer determines the maximum denomination of its gift
cards and sets its own limits on the value of cards sold per
transaction or day. Companies aren't always required to collect
information such as the name or driver's license number of the
Apple Inc. added a warning in May to its in-store checkout
system telling consumers that scammers sometimes ask victims to buy
gift cards and warning them not to provide gift-card information to
someone they don't know.
After that action, the number of reported scams by victims that
purchased Apple gift cards declined in New York City, said New York
Police Department Deputy Inspector Jessica E. Corey, commanding
officer of the crime-prevention division.
At times, the technology company freezes the Apple IDs of users
who redeem gift cards the company suspects were obtained through
scams, a spokeswoman said.
Nationally, the volume of gift cards purchased in scams is
difficult to quantify, because they are used in disparate scams
that typically also include bank transfers, mailing cash or
Late last year Walmart Inc., Best Buy Co. and Target Corp. made
nationwide changes to their gift-card policies after working with
the Pennsylvania Attorney General's Office, in some cases lowering
the maximum denomination of gift cards sold or the total value of
cards that can be sold in a single transaction.
"If scammers can only get $250 or $500 at a time it may not be
worth it to them to use that mechanism anymore," said Sarah Frasch,
director of the Bureau of Consumer Protection in the Pennsylvania
Attorney General's Office.
Walmart, for example, lowered its gift cards' maximum
denomination and the daily per-person limit. Best Buy reduced the
maximum denomination to $500 a card from $2,000, and the total
single-day limit to $2,000 a person, from $6,000.
Target trains employees to spot suspicious customer behavior and
share information about scams with consumers they suspect are
falling for one.
The Retail Gift Card Association, a trade body, says best
practices include using technology to flag suspicious sales,
activation and balance-check activity as well as regularly
reviewing cashier training and point-of-sale procedures.
Other ways retailers could make it tougher for scammers to
access gift cards through victims include adding a delay between
when a card is purchased and when it can be used, empowering
checkout clerks to refuse to sell cards and banning gift-card sales
at self-service checkouts, law-enforcement and consumer-protection
Retailers could further frustrate some scams by restricting the
use of their own store cards for purchases of third-party cards
such as Google Play or iTunes that can be redeemed online, they
Gift cards that can be redeemed online are particularly helpful
to scammers because they can maintain anonymity, said Shelley
Hunter, who runs a blog called Gift Card Girlfriend and often hears
from consumers who have been victims of fraud.
Write to Sarah Krouse at firstname.lastname@example.org
(END) Dow Jones Newswires
December 22, 2019 15:13 ET (20:13 GMT)
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