With the holiday season in full swing, scammers are ramping up their efforts to steal gift card information, costing consumers tons of money. Class action lawsuits are being filed against retailers like Walmart for failing to secure the cards that consumers purchase, allowing scammers to easily access the information and steal money. Ring of Fire’s Farron Cousins discusses this issue with Scott Hardy from Top Class Actions.


*This transcript was generated by a third-party transcription software company, so please excuse any typos.

Farron Cousins: Well, we’re currently in the thick of the holiday shopping season, which basically means we’re in the middle of gift card season for a lot of American citizens and unfortunately, scammers have found a way to steal money from gift cards before the users are even able to use it themselves.

Joining me now to talk about this scam and some of the retailers who are trying to, I guess be held accountable for allowing the scammers to do this, is Scott Hardy from Top Class Actions, Scott, so Walmart, one of the largest retailers, I mean essentially on the planet at this point. They’re kind of in the thick of this class action lawsuit that’s been filed about these gift card scammers. So explain to us a little bit what this is about.

Scott Hardy: Sure. So as we know gift cards, a study says that 6 out of 10 people who are buying gifts this year have gift cards on their list. So as you mentioned, gift cards are hugely popular to give out. I know that I ask for them for my family because I’m so difficult to shop for. But, what this class action alleges is that it’s very easy to tamper with Walmart gift cards and many gift cards as a whole.

Even though we’ve got Walmart listed in this class action investigation right now, we’re likely going to see some others as well in the very future because what people will do is they will go and take a look at a gift card and they will scan or they will take pictures of all of the codes on the back of the gift cards. Because as you know, you can walk up to an end rack, an end rack display, take you know, a few dozen gift cards off that.

Take pictures or scan each individual gift card. And then they will peel off the code on each of those gift cards and they’ll get that code. Now, of course those aren’t activated, but what these scammers can do is they’ve got software online where they put in every single code that they scanned and every activation code that they, you know, that they uncovered and the software will tell them as soon as that card is actually activated. And then all the scammers have to do is they put a little sticker that they again can buy online very cheaply and easily on the back of each card that they took that they, you know, got the actual codes for.

And so they scan the card, they take off the sticker, they scan that sticker so they know what, you know, what the code is so they can use it online and then they put a new sticker on it and it’s amazing that you have Walmart and other major retailers that haven’t actually addressed this and haven’t fixed it because this is something that if they just change how they include, put the gift card in the packaging, scammers wouldn’t be able to take off that secret code and then put a new sticker on it.

And what’s really sad is that, you know, these people are calling up Walmart and saying, hey, I got this gift card. It was new. And the plaintiffs in this class action, you know, they have had two $25 gift cards. And they said we didn’t use it. And Walmart said, well the cards were tampered with. We know they were tampered with and you’re just out that $50 bucks that you spent on those gift cards. They didn’t give the consumer any help or give them any kind of reconciliation to get that money back even though that they’re the ones that are releasing these gift cards that are easy to fraudulently effect.

Farron Cousins: It’s really troubling here when you consider several facts. First and foremost, everybody needs to understand this isn’t something that we just discovered. You know, we didn’t just learn about this a week ago. Last year, there was a massive report and an exposé on national television explaining exactly how this works. Consumer report, not that long ago, put out a major report showing how this scam works. So we have had no less than 12 months, at least, I’m sure this has obviously been known for a much longer time than that, but there’s no excuse that for at least the last 12 months, these retailers did not know exactly what was going on.

They knew exactly what the problem was. They made the conscious choice to not fix it at that point, not to mention the fact that if you walk into a Walmart, a Target, a Best Buy, any of these big box stores or heck at this point, even a grocery store, it’s almost like casinos with the level of security they have in there and the number of cameras. There is not an inch of those stores that is not covered by a security camera. So I’m sure if you go back in the footage you can probably find the people who are doing this, the stores’ just making the conscious choice to not do that.

Scott Hardy: Right, and I think you’re correct. I don’t think what we’re seeing here are average scammers walking into a Walmart, pulling a stack of gift cards off and doing this. I think you have somebody that might be on the inside, maybe an employee because as we know, Walmart’s not big on fairly compensating their employees and you’ve got these people that could just sit in the back, take off all of the stickers on the gift cards, take all their pictures and then put the new stickers back on there and then put them right back out there on the aisle and there’ll be to be able to do this for Walmart gift cards and any gift card that doesn’t have the secret code covered by a piece of, you know, that’s not actually in plastic.

And when you buy a gift card, you want to make sure that all people can see and get access to is the code that the cash register will actually scan. You want to make sure they do not have access to the little sticker or to the thing that you might scratch off to get your super secret code because if they do have access to that, it makes it much, much easier to steal that gift card.

Farron Cousins: Absolutely, and that’s something that all shoppers need to keep in mind. As we had pointed out, this is the time of year when gift card sales go absolutely through the roof, so please make sure if you’re in an aisle at the end cap, wherever it is, where they’ve got these gift cards, make sure you get one where that information cannot be seen in any way from the outside of that package. Protect your purchase, keep your receipts. That is also very important and if the retailer does not want to honor what you have done, if they allow that card to be fraudulently hacked or stolen, that’s when you need to take action and you can find out more information about this.

Just follow the link in the description below this video is to topclassactions.com. They have all the information you need and Scott Hardy, we appreciate you telling us this story. This is something people need to take seriously because this is obviously a very well orchestrated and put together scam that they’re running. So thank you again for keeping up with this and telling us all about it today.

Scott Hardy: Thank you Farron, appreciate your time.

Farron Cousins is the executive editor of The Trial Lawyer magazine and a contributing writer at DeSmogBlog.com. He is the co-host / guest host for Ring of Fire Radio. His writings have appeared on Alternet, Truthout, and The Huffington Post. Farron received his bachelor's degree in Political Science from the University of West Florida in 2005 and became a member of American MENSA in 2009. Follow him on Twitter @farronbalanced