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

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.

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."

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."

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."