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Rip-Off Alert: Swiped credit card numbers used on gift cards

Reported by: Marie Mortera
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Updated: 1/30/2013 5:35 pm
LAS VEGAS (KSNV MyNews3) -- Con artists are finding new ways to make a fortune on cardholders who don't bother checking their statements.

One credit card/gift card scam racked up more than $100,000 in losses in one case alone. Postal inspectors say the nationwide scam is simple and starts with stolen credit card numbers.

"We believe it was through either an online chat room where they purchased these credit card numbers or an employee at a local merchant,” said U.S. Postal Inspector David Gealey.

Con men then go to a store that sells gift cards, grab several worth $500 each and proceed to the checkout counter. There, they come up with a phony reason why their credit card can't be swiped.

"They tell the clerk something must have happened to my card,” Gealey said. “ ‘It's damaged, my dog chewed on it,’ whatever it may be. They would get the clerk to manually put the card number into the system. Once they did that, the transaction was completed."

With the gift cards in hand, the con men would make a phone call transferring the money on those cards to a prepaid debit card.

"Once they transfer those funds, they are as good as cash to them,” Gealey said. “They can go to any merchant or a bank and obtain cash. In 5 to 10 minutes, they obtain $2,500 in cash."

Postal inspectors were able to learn the intricacies of the scam through surveillance tape.

"They would never actually give them the card to the clerk when they actually asked for it. ‘Oh here, I'll just read you the number,’ “ Gealey said. “They would cup the card, and the clerk is just punching in the numbers."

Once they discovered the scheme, inspectors were able to cross-check the time of the transactions with cell phone records and credit card statements to nab the con men.

"All three of the suspects ended up pleading guilty to Access Device Fraud, one of the individuals pleads guilty to Aggravated Identity Theft, and of all the prison terms,” Gealey said. “The shortest (sentence) was one year."

What can you do to avoid being a victim of this scheme? Postal inspectors say closely check your credit card statements and activity. Inspectors say very few of the victims in this case even knew their credit card numbers had been compromised.


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