A couple in Laguna Woods, CA purchased $1,000 in Nordstrom gift cards – from CVS – for their daughter as a gift. When the daughter eventually tried to use the gift cards at a Nordstrom department store, she was surprised to learn that the cards were emptied.

Gloria Polin and her husband, Lewis, contacted both CVS and Nordstrom to only get the runaround. CVS said it wasn’t their problem because the cards were activated (and yes, there are receipts to prove this). On the other side, Nordstrom said their records didn’t reference the cards at all, therefore, it wasn’t their issue.

So, what type of fraud could have occurred?

According to David Lazarus, a reporter with LA Times, there are several scams used by thieves with gift or pre-paid cards. Here are two examples:

  1. Scammer will copy the gift card number or scan the magnetic strip while still in the store. Then, the scammer will constantly check online to monitor when the card is activated. Once its activated, the fraudster will use up the money on the card by making online purchases.
  2. An individual will call random phone calls selling unwanted gift cards. The fraudster will ask the seller to conference the retailer to confirm the card number and make sure the card is legit. The fraudster is actually recording the touch tones when the card number is given. An expert scammer will figure out the number and commence to using the money to make purchases.

Although it is unknown what actually happened in the Polin’s case, there are ways individuals can protect themselves from being scammed.

  • Only buy gift cards in protective packaging, with the numbers concealed. And even then, look closely to make sure a scammer hasn’t peeled open the package and then put the card back.
  • Be vigilant. While most store employees are trustworthy, some have been known to use hand-held scanners to swipe magnetic strip info or even keep the activated card and hand you a blank one. You can always ask a cashier to confirm a card’s value after activation, just to be safe.
  • Think twice before buying gift cards through online auctions. That seemingly discounted plastic could actually be worthless.
  • It also never hurts to use a gift card as quickly as possible. Once it’s been activated, it’s the same as money. You don’t want it just sitting in a drawer.

Another safe guard against gift card fraud, is to send your loved one’s an e-gift card. This cuts out the need to go to a store and purchased a physical card.

Lucky for the Polin’s, CVS eventually stated that they would refund the couple their $1,000.

It was more than likely an inside job.