Maryland is the first state in the nation to pass legislation aimed at thwarting a growing scam known as “gift card dumping.”
The Gift Card Scam Prevention Act of 2024, recently signed by Maryland Gov. Wes Moore, requires that gift cards sold in stores be packaged in secure packaging so thieves can’t illegally obtain their numbers. Under the new law, merchants who sell gift cards online must register them with the Consumer Protection Division of the Attorney General’s Office, while sellers must also train their employees on how to spot gift card fraud.
In such scams, criminals steal gift cards, obtain their card numbers and empty the balance on the cards before putting them back on store shelves so that they are worthless when purchased by consumers.
Without proper packaging, funds stored on gift cards are vulnerable because their barcodes and PINs, hidden only by a scratch-off sticker, are visible. Thieves can easily remove the sticker covering the PIN and replace it with a new one, making the card appear unused.
Data released in May by the Federal Trade Commission showed that gift card scams, which have spiked during the pandemic, accounted for $228 million in losses in 2023. Chinese crime networks in particular have used this type of fraud for illegal gain, according to a report by ProPublica. The U.S. Department of Homeland Security has launched a task force to combat card pilferage.
A 2022 AARP report found that about a quarter of U.S. consumers say they have given or received gift cards that had expired.
