Forensic Accountant Warns: ‘Tis The Season for Gift Card Scam Fraud

David Anderson is principal of David Anderson & Associates, a Philadelphia forensic accounting firm that provides a full range of forensic accounting services including business valuation, fraud investigation, and fraud deterrence programs in Philadelphia and the Delaware Valley.

According to the international accounting firm, Deloitte Touche Tohmatsu, Limited, 54 percent of Americans plan to buy gift cards this holiday season. David Anderson, principal of David Anderson & Associates, a Philadelphia forensic accounting firm that provides a full range of fraud investigation and fraud deterrence programs in the Delaware Valley, states that gift cards have become the number one most popular holiday gift, beating out clothes, toys and games, and books.

Fraudsters love gift cards, too.  According to Certified Fraud Examiner Anderson, a recent research report by the Association of Certified Fraud Examiners (ACFE) lists these schemes as being among the latest trends in gift card scams:

Stealing Gift Card Numbers

In this scheme, the fraudster takes one or more gift cards from the display rack at a retail store or post office, carefully removes the card from its packaging (if any), scratches off the silver sticker on the back of the card (under which is the PIN number), records the PIN and gift card number (usually by taking a photo with his/her phone), puts an identical silver sticker (easily purchased on eBay) on the card to replace the one scratched off, and returns the gift card to the display rack.

The fraudster waits until the gift card is activated, and regularly monitors the card issuer’s website to check the balance.  Once the balance shows up (meaning the card has been activated), the fraudster either uses the relevant gift card information online or sells the gift card online (providing the gift card info and PIN number to the purchaser).

Since the gift card has been activated before the relevant holiday, and because many recipients don’t try to use the card for days, weeks or months after receiving it, this gives the fraudster plenty of time to carry out the scheme.

Other variations of the scheme involved hacking the issuer’s website for gift card information or employing specialized software to test millions of number combinations until an active gift card is identified.

Balance Confirmation Scams

In this scheme, the fraudster contacts a seller who has listed a gift card for sale on eBay, Craigslist or some other site.  The fraudster asks the seller to make a three-way call to the card issuer with the fraudster on the line to confirm the card’s balance.  The purpose of this call is for the fraudster to capture the touch tones the seller enters.  The fraudster can then use these touch tones to determine the card number and the PIN number, and then uses the card information himself/herself.

Other Gift Card Scams 

These schemes include dishonest cashiers who switch the activated gift card for an “empty” gift card at the cash register, and phishing e-mails that offer free gift cards as a way to obtain personal financial information

So, how can you avoid becoming the victim of a gift card scam?  The ACFE suggests you consider some or all of the following:

  • Buying gift cards only from reputable sellers.
  • When possible, buying gift cards online directly from the issuer.
  • Avoiding gift cards that are displayed in easily accessible areas (for example, asking for a gift card stored behind the counter).
  • If buying a gift card from a display rack, choosing a card from the least accessible area of the rack (such as from the bottom row).
  • Choosing a card from the middle of the rack spindle instead of choosing the front card.
  • Carefully inspecting the card’s packaging and PIN sticker for any tampering.
  • Watching the cashier scan and activate the gift card.
  • Matching the card number to the number shown on the receipt (if the card number is shown on the receipt).
  • Using the gift card as soon as possible.
  • Frequently checking gift card balances.
  • When possible, registering the gift card on the issuer’s website.
  • Immediately contacting the card issuer if the gift card balance is lower than expected.

If you require the services of a Certified Fraud Examiner or any other forensic accounting services in Philadelphia and the Delaware Valley, please contact the Philadelphia forensic accounting firm of David Anderson & Associates by calling David Anderson at 267-207-3597 or emailing him at

About David Anderson & Associates

David Anderson & Associates is a Philadelphia forensic accounting firm that provides a full range of forensic accounting services in Philadelphia and the Delaware Valley.  The experienced professionals at David Anderson & Associates provide forensic accounting, business valuation, fraud investigation, fraud deterrence, litigation support, economic damage analysis, business consulting and outsourced CFO services.  Company principal David Anderson is a forensic accounting expert who has more than 30 years of experience in financial and operational leadership positions and is a Certified Public Accountant, a Certified Fraud Examiner and a Certified Valuation Analyst.