NORTH TEXAS – Gift cards will continue to be a popular holiday gift, but those who have them on their shopping list should be aware of worldwide scams. The CBS News Texas I-Team has learned that the latest gift card scam is global and involves Chinese gangs and hundreds of “mules” across the country.
“This is bigger than most people realize,” said Lt. Jeff Roberts of the Texas Financial Crimes Information Center, a statewide office that coordinates law enforcement investigations into organized financial crimes. Ta.
“The reality is that this is organized crime, and broadly speaking, this affects every state in the continental United States and probably around the world,” Roberts said.
Gift card fraud by China-backed organized crime
Federal law enforcement is also involved. Last year, Homeland Security Investigations created Project Red Hook, a joint effort between law enforcement and major retailers to focus on Chinese-backed gift card fraud.
“We’ve seen deep Chinese organized crime involvement in this area,” said Adam Parks, director of Project Red Hook. “I think they saw this as an opportunity to get rich quick without much consequence.”
According to the DHS website, this gift card scam funds illegal gang activities such as fentanyl manufacturing and smuggling, illegal immigration, and human trafficking.
Maryland is First state to pass law banning gift card theft. New York police called Consumers beware of scammers Pennsylvania State Police tampers with gift card barcodes We have issued a warning about gift card fraud. At the end of 2023.
Gift card fraud techniques
The gang hires people known as “mules” to shoplift large quantities of gift cards from popular retailers. The mule sends the card to a location, the fraudster opens the card, copies the information, repacks it, and sends it back to the mule, who returns the card to the store.
“We’ve seen videos…there are literally factories and places where people are manufacturing and resealing with surgical precision,” Roberts said.
Once a consumer pays for a compromised gift card, fraudsters gain access to that money. By the time the recipient goes to redeem the gift card, the funds are gone.
Thousands of gift cards worth millions of dollars were stolen.
In Burleson, just south of Fort Worth, police arrested two men this summer in connection with what the department called a “sophisticated multi-state gift card tampering ring.” The men are believed to be Chinese and entered the country illegally.
Madison Marston and his friends were caught leaving a Target store in Burleson with shoplifted gift cards stuffed in their “stuffed pockets,” according to Det. Officers found more than 1,000 cards inside the vehicle during the traffic stop.
Marston said the men were operating out of a hotel in Carrollton, just north of Dallas. When police searched the hotel room, they found an additional 4,000 cards with an estimated value of $1.7 million.
Investigators believe the men shipped the cards to California, where they were altered and resealed before being returned to the DFW store.
“You’ll never know which gift cards are good and which are bad,” Marston says.
Pack adulterated gift cards into racks
Police in the Arlington neighborhood of Pantego investigated a similar incident last fall at a CVS Pharmacy on Park Row. An employee called police after seeing the man take gift cards from his pocket and place them on a rack.
Officers arrested the man and found him with a backpack filled with gift cards. A search of his car revealed a box containing thousands more.
“He was actually a college student,” said Pantego Police Chief Robert Rife. “He just happened to be chosen for this job and earn some extra money to put this gift card on the shelf.”
The 25-year-old man was from California. Reiff told officers he was traveling around the United States in a rental car and exchanging gift cards at stores, police said.
“I think he was at the very bottom of the organization that was doing this theft,” Rife said.
By filling racks with dozens of tampered cards, criminals increase the chances that customers will not notice any signs of tampering. For this reason, officials said shoppers should carefully inspect all cards before making purchases.
“My advice is to treat gift cards like produce,” said Parks, director of Project Red Hook. “You don’t want to get a bruised apple, you want the best apple. Red and pretty. Same goes for gift cards.”
He also suggested using the card immediately or transferring money to a digital wallet if possible.
Project Red Hook has made more than 150 arrests nationwide since it was founded last year, Parks said.
How to spot gift card tampering
According to Project Red Hook, red flags for gift card tampering include:
There is a visibly obvious tear in the zigzag cut around the perimeter of the secure pack, or there are visible paper fibers around the border where a sharp knife may have cut the edge. Visibly obvious tears or exposed scratches along the pull tab or pull tab, or broken pull tab or knife cut and then replaced. You can tell if this is happening by a slight bend back and forth. Product and brand logos, colors, or marks may look similar but do not match a company’s intellectual property. Personal Identification Number (PIN) cover is missing, missing completely, not flat/smooth, or wrinkled. The product’s packaging or PIN cover deviates from the company’s standard gift card packaging. Compare the package and PIN to others on the shelf. There may be no physical signs of tampering, but the balance does not match what you purchased.
