Toronto

A lot of people 'getting ripped off' by gift card scammers, victims and experts warn

When a recently married Whitby, Ont., couple tried to spend a $100 gift card they were given as a wedding present, they were shocked to learn the balance was zero. The Canadian Anti-Fraud Centre says it is aware of organized retail fraud, but doesn’t track how often it’s happening.

Thieves steal balances off gift cards before people can spend them, police say

Anand Pavamani, 43, says he and his wife were given a gift card as a wedding present, but while trying to use it, they found the balance had already been drained. (Shannon Martin/CBC News)

It was one of the happiest days of their lives: April 20, 2019, when Anand Pavamani and his wife got married.

Among the presents from family and friends, the couple received a stack of gift cards. They waited until after moving into their new home to spend one in particular — a Happy Home gift card, valid at several stores, including Home Depot. 

In late September, they went to buy a lawnmower, but got a shock at the checkout. 

"The cashier was having troubles with it," said Pavamani, 43, who works from home in Whitby, Ont., as a media producer.

Turns out the $100 balance was drained, even though the couple hadn't touched the card.

They left the store empty-handed and Pavamani started what would become more than a month of detective work — dozens of phone calls and emails with little luck. He didn't want his friends' kind gesture to go to waste.

"It's their hard-earned money," he said.

The Canadian Anti-Fraud Centre told CBC Toronto it is aware of organized retail fraud, but doesn't track how often it happens.

Det. Doris Carriere, who works in the financial crimes unit for Durham Regional Police, says while gift card scams often go unreported, they are likely happening more as technology improves. (Sue Goodspeed/ CBC News)

How thieves can steal your gift card balance 

These kinds of cases rarely cross Det. Doris Carriere's desk, but the veteran Durham Regional Police officer believes that's because many people choose not to report it.

There are countless ways to steal card balances, including something called card cloning, he says.

All it takes is a card-copying machine, easily available online and relatively cheap, and a stack of blank cards, Carriere adds.

"With the software on the computers we have, it's not that difficult."

Experts recommend retailers keep gift cards behind the counters, but Ontario's Ministry of Government and Consumer Services says that's not something it's considering at the moment. (Shannon Martin/ CBC News)

Little response from retailers

Pavamani says one of the most frustrating things about the entire experience is the lack of response from retailers.

Shoppers Drug Mart, where the couple's friend purchased the card, said in an email to Pavamani, "Shoppers Drug Mart is solely responsible for activating gift cards." The store advised him to reach out to Home Depot.

Home Depot confirms the gift card was swiped and used twice just after the couple's wedding, on April 30 and again on May 2, at a location in North York. The chain says it only keeps security camera footage for three months, making it impossible to prove who used the card.

"It seems like every retailer is just, like, wiping their hands clean," says Pavamani.

He filed a police report and reached out to the gift card company, U.S.-based Blackhawk Network.

In an email to CBC Toronto, Blackhawk Network said: "While we don't provide specific details about any ongoing security or fraud prevention measures, we can share that we have placed great care, thinking and effort in fraud technology and fraud prevention."

Pavamani says he was forced to investigate on his own after retailers offered little help when his gift card was scammed. (Sue Goodspeed/ CBC News)

Protect yourself from getting scammed 

Ontario's Ministry of Government and Consumer Services says there are things shoppers can do to protect themselves. 

  • Try to buy cards from behind the counter.
  • Don't buy a card that indicates tampering has occurred.

But cybersecurity expert Claudiu Popa believes there's actually very little consumers can do when it comes to gift card scams.

"This is big business. And big business means people are doing it as part of their daily job," says Popa. "They're professionals."

He recommends people buy gift cards online directly from retailers or not at all.

"The gift card fraud ecosystem is massive. And it presents numerous opportunities for mischief, for fraud, for scams. I personally stay away from gift cards."

Pavamani ended up getting the $100 refunded onto the gift card from Blackhawk Network. But he believes it only happened after CBC Toronto got involved.

He hopes his story inspires others to report any possible scams to police.

"A lot of other people are probably getting ripped off because it seems like the retailers aren't doing anything."

ABOUT THE AUTHOR

Shannon Martin

Reporter, CBC Toronto

Shannon is an award-winning reporter with CBC Toronto. She was part of the core team that launched "No Fixed Address", a hugely popular series on millenials renting and buying in Toronto. In 2016, Shannon hosted a special live broadcast on-air and on Facebook simultaneously from Toronto Pride, which won top honours in the Digital category at the RTDNA awards. Contact Shannon: shannon.martin@cbc.ca or find her on Instagram at @ShannonMartinTV.

Comments

To encourage thoughtful and respectful conversations, first and last names will appear with each submission to CBC/Radio-Canada's online communities (except in children and youth-oriented communities). Pseudonyms will no longer be permitted.

By submitting a comment, you accept that CBC has the right to reproduce and publish that comment in whole or in part, in any manner CBC chooses. Please note that CBC does not endorse the opinions expressed in comments. Comments on this story are moderated according to our Submission Guidelines. Comments are welcome while open. We reserve the right to close comments at any time.

Become a CBC Member

Join the conversationCreate account

Already have an account?

now