Why Robocallers and Scammers Love Gift Cards
24 Dec 2019

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 victims.

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 widely.

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 threshold.

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.

By Sarah Krouse, The Wall Street Journal, 22 December 2019

Read more at The Wall Street Journal

Photo: Thomas photography [CC BY-SA 4.0], via Wikimedia Commons

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