News center
All-inclusive business

Gift card scams: How to avoid them, get money back if balance is zero

Jun 18, 2023

Would you ever dream of buying a beautiful gift, maybe a cashmere sweater or a diamond necklace, and have it gift-wrapped at the store, only to watch your special someone open the box and discover it was empty?

Unfortunately, that's what's happening too often during the holidays and other times of the year for those who hand over gift cards. It's another way that criminals who run elaborate fraud rings steal dollars from consumers.

Who would imagine that a gift card that you just received suddenly had little or no value? How could a gift card have been redeemed when it was sitting inside a holiday card or little gift card tin covered with bouncy penguins?

About 26% of people reported being surprised to learn that they gave away or received a gift card with a zero balance, zip, not a dollar left on it, according to an AARP survey. That's up from 21% from a similar survey last year.

While most gift cards work fine, some consumers are astounded when they go out to dinner or try to buy a new pair of running shoes only to see their gift card declined because of a zero balance after crooks mysteriously drained money off the card.

This past summer, Dina Pfeiffer was overwhelmed by her brother's generosity when he handed her son Niall two Visa gift cards with $200 each on them for his graduation from Clawson High School.

The next day, she decided to go online to review any rules or restrictions. She couldn't believe it when she spotted the balance on one card. She was so stunned that she woke up her son who was still sleeping to ask him if he had already spent the money on that Visa card. He had not.

"There was a dollar left on it — out of $200 that should have been on it," Pfeiffer said.

The online information for viewing transactions on the Vanilla brand Visa card showed that one purchase was made at an OfficeMax store, she recalled, or some store with a similar name. "It had been done in the wee early hours of the morning." The store wasn't in Michigan, she recalled.

Oddly, the $200 on the second gift card was fine. And so were two other gift cards her brother had bought for another family member.

Losing $199 all of a sudden was mind-boggling. Her brother bought the cards one day in late June, gave them to his nephew the next and she discovered that the money was gone the day after that on July 1.

She isn't sure what motivated her to go online. "I don't know what prompted me to do it so quickly, call it the angel on my shoulder," Pfeiffer said.

Now, she'd tell anyone who gets a gift card to check out the balance quickly. See what you need to do to register the card — and look for any problems so you complain as early as possible.

Gift cards remain a popular and often quick-and-easy gift.

Total spending on gift cards is expected to reach $28.6 billion in 2022, compared with $28.1 billion in 2021, according to the National Retail Federation. Holiday shoppers plan to buy three to four gift cards and spend around $50 a card on average.

From Thanksgiving Day through Cyber Monday, gift cards were among the top gifts purchased and were bought by 27% of those surveyed, according to the National Retail Federation.

Other top gifts: Clothing and accessories (bought by 50%); toys (31%); books, video games and other media (24%); food and candy (23%), and electronics (23%).

About 60% of gift shoppers plan to buy a gift card, according to data from Numerator, a market research company. Amazon is the most popular gift card, followed by Target, gift cards for a variety of restaurants, Walmart, and then credit-card-style gift cards, like those with Visa and Mastercard brand logos.

The key with gift cards appears to be to use them soon — and act quickly if you run into trouble.

"Once you realize there's no money on it, you can try to reach out to the card issuer or the retailer where you purchased it," said Kathy Stokes, AARP's director of fraud prevention for the Fraud Watch Network.

But it's not guaranteed that you'd have luck getting your money back. Sometimes, Stokes said, you have a better chance if you react quickly and contact the issuer soon once fraud is discovered. Much could depend, she said, on whom you connect with at customer service.

When Pfeiffer spotted the problem, she called the customer service number listed on the card itself immediately. She explained the situation. She had a receipt. She noted that she lives in Michigan and the purchase was made out of state. Eventually, she did get the money reimbursed and she was extremely impressed to see it.

"It took a couple of months but they reissued a $200 gift card to us," she said.

"I really thought we were just out that money."

Will you get your money back? It's a good question. Maybe, yes. And maybe, no.

Some of the rules regarding fraud are hazy. A disclosure from a U.S. Bank Gift Card agreement for a Mastercard gift card states you'd have "zero liability" but leaves some wiggle room in its limitations. "You are generally protected from all liability for unauthorized transactions. However, if you do not tell us within 60 days of the date of the first transaction you believe to be unauthorized you may not get back any money you lost after the 60 days if we can prove we could have stopped someone from taking the money if you had told us in time."

Mastercard's gift cards come with "zero liability protection" which keeps the recipient safe from unauthorized purchases if their card is lost or stolen after registration, Matthew Alcuri, vice president of product management for Mastercard North America, said in an emailed statement.

An increasing shift from physical to digital gift cards will further reduce the risk of third-party gift fraud, Alcuri said.

When there is fraud consumers should contact the customer service number, he said, usually on the back of the card. A customer service representative may initiate a claim and an investigation. In some cases, he said, money can be put back on the card if the cardholder previously registered it upon activation.

Some programs, he said, will not be able to assist cardholders if they wait more than 60 days to file a claim.

More:Holiday shopping ahead: What can trip you up in 2022

More:Holiday shoppers warned that online puppy scams can spoil Christmas

Kroger, which has various promotions during the year for building fuel points when you buy gift cards, said customers should first contact the issuer of a third party card if value is lost. If you bought a Starbucks card at Kroger, you'd go contact Starbucks. The third party issuer typically decides how you might be reimbursed.

A Kroger spokeswoman said the retailer will try to help customers if the situation isn't resolved. In that case, the Kroger customer can call 866-544-8062 or email [email protected].

Many of us never think of keeping a receipt or paperwork for a gift card. It's never the wrong size, right?

But paperwork is needed because scams can happen. If you're giving a gift card, it doesn't hurt to include a receipt for it along with the card.

The scams are complex. The crooks grab stacks of gift cards off a shelf, without anyone noticing, and then remove the security tape on the back of each gift card. They either take photos or write down the card's secret activation code. And they can buy similar security tape to replace what they took off the card to make the card seem OK.

The crooks know how to work the system — even when they don't even have the card in their hands — to gain access to the money and wipe the card clean.

The bad actors are able to use technology to monitor when compromised cards are activated. Soon after money is loaded onto the card, the scammers will the use the activation code.

"Once the card is activated and you've to the PIN for it, it's pretty much as good as cash," said Daniel Ayoub, senior director and analyst for Gartner, a technology research and consulting firm.

Ayoub said the criminals can make money in a variety of ways: Maybe they're selling the gift cards online and trading them in for cash value; maybe they're buying expensive goods that can later be resold on the black market; maybe they're buying items for themselves; maybe they're buying goods that are shipped to clients who later sell the item; some might even trade in the gift cards for cryptocurrency.

"It's becoming an increasing problem to the point where card issuers now are taking notice of it," he said.

Ayoub visited a store in suburban Detroit where he lives and noticed that some gift cards on the rack are being packaged more carefully. "It's not like the card is hanging from a little piece of rubbery glue like it used to," he said.

Big box stores are encasing the card in more packaging to hide the important numbers on the back, he said, which could be a sign that retailers are trying to find ways to stop the fraud before it happens.

He's not a fan of just grabbing a gift card off a huge rack at the store. He'd suggest buying them online from the retailer or restaurant who is issuing the card and emailing that e-card to the person. If you want a plastic or paper card, you can buy that online, too. Amazon even sells their own gift cards online in an attractive holiday box.

Even cards bought online, though, might face issues related to fraud.

"But then you have documented proof that you purchased it, that you had it activated, that it came to you," Ayoub said.

Quite honestly, Ayoub says he prefers to give the old-fashioned way and often puts cash in an envelope. "Why limit them to one store? Just give them cash," he said.

Those who have bills to pay ahead might welcome the extra money.

Another key tip: Do not go online just anywhere to try to find out the value of your card, Ayoub said. Con artists can create third party sites to capture your information. If you are going online to check a gift card's balance, make sure you're at a retailer or banking site that's listed on the gift card itself, not something you find online.

Consumer watchdogs warn that crooks have been known to create phony websites that advertise gift cards at a steep discount — but the crooks steal your financial information and possibly your money. You don't receive the gift card.

Other gift card tips:

Many times, of course, a gift card can be declined when there wasn't a scam. Maybe the card wasn't activated properly when it was bought. Maybe someone who gave you the card made a mistake and gave away a card they've already used. It can happen.

I once ran into a problem when we bought gift cards — which were not compromised — and a clerk at the store had some trouble running the card. She said the card wasn't activated when it was. A store manager resolved the issue.

In some cases, the card — which could still have money on it — might be declined at the register when the dollar value being charged against the card is greater than the amount that was put on the card.

Tell a store clerk that you plan to use a gift card in advance of the purchase and explain how much is on the card. Some clerks are familiar with how to use a Mastercard or Visa gift card to make a transaction go smoothly, if you have to use a gift card and then add money to cover the purchase.

Shelley Hunter, who is known as the Gift Card Girlfriend and has a blog at, said fraud isn't always involved if there is trouble making a purchase with a gift card.

"Stores are increasingly implementing security delays on some gift card activations for fraud prevention," she said. "So talking to customer service should help sort out whether or not a scam is involved."

Contact Susan Tompor: [email protected]. Follow her on Twitter @tompor. To subscribe, please go to Read more on business and sign up for our business newsletter.

More: More: @