Blog: Macy's Gift Card Fraud

Menu
Archives
Search
RSS Feed
Macy's Gift Card Fraud - Saturday, August 24, 2013
Last December, the wife and I were victims of gift card fraud, where a thief drained the balance on our Macy's gift card, while the card was in our possession. Though Macy's replaced the card, it was not without hassle and prior embarrassment, something that could've altogether been prevented by Macy's physically securing the cards prior to sale.

Below is the review I posted on Yelp for the Northridge Macy's where our card was issued and re-issued. Though our card balance was restored, I was left unsatisfied with the manager's response and Macy's failure to protect consumers. I'm re-posting my review on my blog in hopes that 1. it'll get more exposure, and 2. I'll have it backed up in case Macy's attempts to get it removed from Yelp. The latter scenario seems unlikely (Streisand Effect, anybody?) but not altogether improbable.

My hope is that more people will be aware of the dark side of the gift card industry, will take steps to protect themselves against fraud, and perhaps even avoid buying gift cards going forward until said gift cards are made more secure.

Original review posted 8/24/2013:
--------------------
Did you know that a gift card purchased from a store can already be compromised, allowing a thief to spend your balance without your knowing?

What Happened:
Last June, the wife and I received a gift that we returned to the Northridge Macy's for store credit. The gift amount of over $150 was loaded onto a Macy's gift card. Then at Christmas time, we received a shocking "present" when we tried to use our gift card at the Sherman Oaks Macy's and were told it had a zero balance!

After some helpful investigation by Sherman Oaks Macy's, we found that our gift card was used in October at the Macy's in Montebello, a city we'd never even heard of. But how could this have happened when the gift card never left our possession? Clearly, something fraudulent occurred.

The Scam:
So I did some research online and found that this type of gift card fraud is getting more common. And as recently uncovered, there's a whole crime ring that's been targeting Macy's: article here.

One method I read about involves the thief cloning a gift card. He'll do this by stealing a card from the store, taking it home, and using readily-available hardware to copy the account number on the card's magnetic stripe onto another card. He'll then return the original card to the store, wait for an unsuspecting customer to activate it with a balance, and then use the cloned card to drain the account's balance.

Macy's is ripe for this scam because they leave their gift cards on top of counters, often unsupervised, open for anybody to grab.

Our Money Back:
After I figured out what happened, the wife and I returned to the Northridge Macy's, where our card was issued, to get our card replaced. A manager helped me, and after 45 minutes of him making calls and taking my information, he was able to hand me a replacement card with the original balance.

However, I wasn't impressed with his attitude. He acted like he was doing me a favor, that this type of theft happens with all retailers and that Macy's is just another victim. Which is true in one sense, but the fact that Macy's leaves their first line of defense wide open by not physically securing their cards, places some fault on them. Not once did the manager apologize for the trouble and embarrassment that my wife and I were subjected to, trouble that Macy's could've and failed to help prevent.

Protect Yourself:
I asked the manager if my new card was secure, and he replied that there should be no problem with it since it was taken from a new box in the back of the store. Implicitly, he was admitting to the fact that the cards left wide open on the counter are insecure.

So if Macy's and other stores aren't going to protect your cards, how can you protect yourself? First, understand that though this type of fraud is very rare, it still does happen. Consider not buying gift cards and instead giving cash.

If you still must buy a gift card, try to buy one that's locked behind a window or is in large packaging, which is harder for a thief to have snuck out of the store.

And if you're the recipient of a gift card? Look for signs of physical tampering, try to use your balance quickly, and check your balance frequently for signs of fraudulent use. And keep all receipts, especially the initial one that shows how much money was loaded onto the card. If it wasn't given to you, ask for it.

Retailers love gift cards because they generate instant revenue and bring shoppers into the store. Retailers don't address the dark side of the gift card industry for fear that people will stop buying them. But if a store fails to reasonably protect consumers from gift card fraud, maybe it's time to rethink whether those gift cards make sense to buy.