You could be gambling this holiday season if you buy a gift card from an internet auction site. A gift card scheme called "e-fencing" is scamming consumers.
In 2005, consumers purchased more than $18 billion worth of gift cards, and most were legitimate. But some consumers bought gift cards from internet auction sites. Joe Larocca, vice president of Loss Prevention at the National Retail Federation warns that's a gamble.
The scam usually starts with stolen credit cards or stolen merchandise that thieves quickly convert into gift cards. In another scenario, gift cards are cloned into phony gift cards with little or no value. In either case, thieves auction off these gift cards online, to unsuspecting customers looking for a bargain.
Several years ago, a retail study showed that 70% of gift cards aquired over the internet were obtained with fraudulent tender, or didn't have the value they claimed to have. The National Retail Federation says consumers should only purchase gift cards from legitimate retailers where receipts are given along with the purchase. Larocca adds that gift card gambling deals online often don't pass the smell test.
"Why would somebody sell a $100 gift card for $50 or for $75. That's like buying a $20 bill for a $10 boll," he said. "We just don't do that."
eBay policies say that no seller can sell more than one gift card at a time, although it is often easy to find sellers offering multiple gift cards. That should be a red flag, unless you want to gift card gamble.