Americans spent nearly $30 billion on gift cards last Christmas. However, thanks to gift card scammers who drain the cash from the cards before your loved one can spend it, not everyone who received a gift card was able to enjoy it. Here’s how to protect yourself against this cruel scam.

According to the Daily Mail, crooks are stealing batches of gift cards from popular stores like Walmart and Target, making a note of the card number, PIN, or activation code, then returning the cards to the store knowing that they will soon be purchased and loaded with cash. Because people rarely spend their gifts right away, these criminals will wait a few days, then use the card information to drain the money before the giftee has had a chance to spend it.

As a result, your loved one will attempt to use the card to make a purchase and find themselves in the embarrassing situation of a store clerk saying, “I’m sorry, but this card has a $0 balance.”

This crime, which began in earnest during the pandemic and is known to be linked to Chinese organized crime gangs, became serious enough last year to cause the U.S. Department of Homeland Security to launch a task force to combat this scourge on American consumers.

Thus far, the effort is paying off. ProPublica is reporting that over the past 18 months, law enforcement across the country has arrested about 100 people for card draining, of whom 80 to 90 are Chinese nationals or Chinese Americans, according to Adam Parks, a Homeland Security assistant special agent.

Parks, who is leading the task force, estimates that another 1,000 people could be involved in card draining in the U.S., mostly as runners for the gangs.

“We’re talking hundreds of millions of dollars, potentially billions of dollars, [and] that’s a substantial risk to our economy and to people’s confidence in their retail environment,” Parks told ProPublica.

Parks believes the money is used to fund other illicit activities such as human trafficking and narcotics.

In one case, the Sacramento County Sheriff’s Office arrested a Chinese national named Ningning Sun who was caught stealing gift cards and replacing them on the rack with another set of seemingly identical ones. Upon further investigation, detectives found over 5,000 gift cards from Target and Apple in his possession.

“Sun was part of a scam that tampered with gift cards, scanned the bar code, and stole money from the gift card as money was loaded on them,” the Sheriff’s office said in a statement issued to the Mail.

“Victims are completely unaware it is happening, and the money is often siphoned to an off-shore account within seconds. These operations are very sophisticated and modifications to the gift cards are often virtually undetectable, even to the trained eye.”

But it’s not impossible.

Authorities say the first thing to do when buying a gift card is to make sure the packaging has not been tampered with. Check the back of the packaging for any anomalies such as scuff marks near the bar code.

Second, make sure the card is sealed in its packaging and that the pin code or activation code is intact.

Sometimes scammers cut off the activation code on the card. Check to be sure the full card is enclosed in the packaging by feeling the outline of the card in its packaging.

Always keep the store receipt just in case.

If the worst should happen, and you gifted someone with a tainted card, the Federal Trade Commission (FTC) encourages consumers to do something about it!

Report the gift card scam to the retailers right away, no matter how long ago the scam occurred. Click here to access How to Contact Gift Card Companies. Ask for your money back. Some companies are actively engaged in helping to stop gift card scams and might return the money. It’s worth asking for a refund.

Report the scam to the FTC by clicking on this link. Every report makes a difference and could mean sparing someone from a very embarrassing - and costly - experience!

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