Dec 4, 2025
A very sneaky retail scam is surging — and gift card buyers this holiday season may be especially vulnerable, even if they believe they’re doing everything right.
Authorities estimate that sophisticated organized criminal groups are “draining” gift cards before genuine shoppers ever use them, costing Americans over $1 billion in the two years since the Biden administration first launched an enforcement project to tackle the issue (1).
The 'gift card draining' scam
Sophisticated criminal groups physically alter gift cards in stores, record the card data, then drain the balance the moment a customer activates it at checkout. Unlike traditional gift card scams that rely on manipulating victims, this one hits even savvy shoppers who never reveal numbers to anyone.
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Rather than phishing individuals or tricking them into revealing PINs, this scam works more like a retail heist. Criminals steal unactivated cards from store racks or buy them and then manipulate them.
They record the barcode, CVV code or PIN, reseal the packaging and return the cards to the shelves. Once an unsuspecting shopper loads money onto the card at checkout, automated systems or bots immediately empty the balance (2).
This is not petty theft. Reporting by ProPublica (3), the BBC and others have linked it to organized crime groups, mostly based in China.
In response, major U.S. retailers are now cooperating with federal agents in a crackdown that includes increased surveillance, anti-theft packaging and new store-display safeguards (4) .
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Why it matters this holiday season
With holiday shopping in full swing, it’s the high season for scammers too. Gift cards are among the top gifts sold, and the surge in demand means more opportunities for fraudsters to put compromised cards back onto retail shelves.
A huge sticking point is that victims often don’t realize anything is wrong until the intended recipient tries to use the card — only to discover the balance is gone. By then, the trail may be cold, with refunds being unreliable, and retailers often denying liability. This leaves everyday shoppers, even careful ones, exposed.
What’s more, while other gift card scams (like with imposters or phishing) dominate headlines, this “tampering” method is especially dangerous because you don’t even need to reveal a PIN or barcode to be victimized. It targets anyone who buys a compromised card (5).
How the scam can happen to anyone
This scam targeted Today host Laura Jarrett, who bought cards at a New York CVS store. They looked pristine: no visible signs of tampering, packaging intact. But when the recipients tried to redeem them, no balance remained. The card data wasn't shared with anyone, and the only possible explanation was the card-draining scam (6).
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The case shows just how much this scam has evolved from the old “scratch-off PIN exposed” con. It doesn’t require gullible victims, just routine holiday shoppers.
Read More: Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
What you can do to protect yourself
Even when a package looks untouched, remember that fraud can already be in motion. These steps go beyond basic packaging checks:
Choose cards 100% sealed inside a cardboard sleeve or box, or buy from behind the counter. Scammers prefer accessible cards hanging loose in clear plastic, so they can quickly access the numbers.
Avoid cards with mismatched barcodes, easily removable stickers over the PIN, or other signs of tampering. Instead, look for a scratch-off surface, as they're harder to swap without evidence of tampering.
- Ask the cashier to scan the barcode on the packaging and the card's back. If they don’t match, walk away.
- Check the balance at checkout or have the cashier verify activation before you leave the store.
- Keep your receipt and snap a photo of the card’s front and back right after activation. Retailers will ask for both if you need a refund.
- Register your card immediately online (if the issuer offers it). This makes tracking easier if there’s a problem.
- Don’t leave activated cards in shopping bags. Scammers can tail customers and steal cards before they’re used.
- If possible, buy online and directly from the brand. Online or in-app balances are updated instantly, making fraud much easier to catch.
- If your card is drained, report it immediately, not days later. Prompt reporting gives you the best chance of reimbursement.
- Be vigilant even when you’re in a hurry: If you’re grabbing a card quickly on the way to a party, that’s exactly when scammers hope you won’t look closely (2).
Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Bloomberg (1); National Cybersecurity Alliance (2); ProPublica (3); BBC (4); Stateline (5); Today (6)
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With a writing and editing career spanning over 13 years, Emma creates and refines content across a broad spectrum of industries, including personal finance, lifestyle, travel, health & wellness, real estate, beauty & fitness and B2B/SaaS/tech. Her versatility comes through contributions to high-profile clients like Moneywise, Healthline, Narcity and Bob Vila, producing content that informs and engages, along with helping book authors tell their stories.
