Gift cards from stores. primary use crime?

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Forums › Finance and wealth management › Gift cards from stores. primary use crime?

kingdragonfly

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#289473 8-Sep-2021 09:41

Should New Zealand pass stricter laws around gift cards, or just rid of them completely.

Gift cards are a favorite of scam artists, blackmailers, money launderers, because of its anonymous nature.

In the states, Walmart gets so much abuse of gift cards, that they limit them to 5 x $1,000 per customer per day.

Walmart clerks are instructed to query anyone buying girt cards, of its purpose. They'll warn about abuse from scam artists and blackmailers. They'll spend considerably time attempting to talk you out of it, if they think you are vulnerable.

The regulations around them are almost non-existent, and almost exclusively benefits the store.

Gift card expired? the store does not have to honour it.

Lost your gift card? the store does not have to honour it.

Spend part of the amount on the card? the store does not have to give change.

Store has gone out of business or changed ownership? the gift card may be unusable

While obviously stores love selling them, it actually encourage crime, in particular money laundering.

I know retail stores get constant questions such as

can I use your store's gift card to purchase another of you store's gift card anonymously? (an attempt to obscure chain of ownership, just had a friend get this very question today)
can I buy 10 gift cards of $999 each (for money laundering, $1,000 is reported, or $10,000 total)

Frankly I think New Zealand should pass a law limiting it to $100 per day per customer.

That would satisify children, and stop most criminals.

Nate001

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#2774263 8-Sep-2021 10:06

I think there should be something to protect the customer. Gift cards, from my view, only benefit the business as it helps with cashflow without selling products.

During the current lockdown I've seen a few places trying to sell gift cards to use after lockdown, eg restaurants. I'd be a bit worried about them not being able to honor it as they're obviously in need of cash currently.

I'm too naïve to understand how scammers use gift cards, do they resell them? Buy products and try to get it refunded?

kingdragonfly

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#2774268 8-Sep-2021 10:21

For instance, drug mules transport drugs between the dealers and the consumers.

The dealers will buy gift cards, and give to mules. The cards launder the money from the user's cash.

Very rarely, the dealer may take gift cards in exchange for drugs. While uncommon, dealer will likely give discount to user for the user's inconvenience.

The drug mule who use the gift cards to either purchase items they need, or purchase then return items for the cash.

It's all to obscure the money trail.

Another example a blackmailer ask the victim buy up to 10 x $999 gift cards. The black mailer chooses this amount to get below money laundering reporting requirements.

Then the blackmailer will use the internet to sell the gift cards (sometimes the dark web but may be a legitimate public website), and pay for them in bitcoins.

He may rinse and repeat if he's really cautious.

When doing this en-masse, he can expect 70% left from the original amount (loses 30% in various fees, reduction in value)

As an aside, criminals will call just about any store. Their goal is to figure out which ones are the most lax, most willing to handle large numbers of large gift cards. Liquor stores / clothes stores / appliance stores that are both widely located, but also not major players are favorites (Not Noel Leeming / not JBHiFi / not New World, ...) . Don't ask me how I know.

Unethical but completely legal.

networkn

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#2774274 8-Sep-2021 10:36

Our local supermarket(s) are very good around this stuff. More than once I have seen people queuing up for purchases of large quantities of gift cards and staff have intervened. I have also politely asked people I have seen queued up.

I actually think there should be a warning on the top of the stands or areas they are sold, alerting people to the fact that people requesting to be paid in large quantities of gift cards may be subject to scammers and have the phone number of cybercrimes division or a Internet education programme listed in case anyone needs help.

tripp

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#2774436 8-Sep-2021 12:39

I really don't see the point of them. I remember the big kick up when dick smith stores went under here. Most of the cards ended up being useless and just created a lot of upset customers and staff that had to deal with the fall out.

If you want to give a present like that then just get a card and put cash in it otherwise send the card and ask for the person bank account and do a direct deposit.

networkn

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#2774438 8-Sep-2021 12:42

tripp:

I really don't see the point of them. I remember the big kick up when dick smith stores went under here. Most of the cards ended up being useless and just created a lot of upset customers and staff that had to deal with the fall out.

If you want to give a present like that then just get a card and put cash in it otherwise send the card and ask for the person bank account and do a direct deposit.

I don't mind them as gifts, though most of mine I buy direct and email.

hsvhel

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#2774440 8-Sep-2021 12:47

I don't really bother with them anymore, lost out when the sounds stores went under. I was young at the time and didn't understand why i wouldn't get my money back.

Never bothered going back to them

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openmedia

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#2774448 8-Sep-2021 13:11

tripp:

I really don't see the point of them. I remember the big kick up when dick smith stores went under here. Most of the cards ended up being useless and just created a lot of upset customers and staff that had to deal with the fall out.

If you want to give a present like that then just get a card and put cash in it otherwise send the card and ask for the person bank account and do a direct deposit.

Farmers or Westfield cards are great presents for Nieces and Nephews etc.

Generally known online as OpenMedia, now working for Red Hat APAC as a Technology Evangelist and Portfolio Architect. Still playing with MythTV and digital media on the side.

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kingdragonfly

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#2774488 8-Sep-2021 14:08

Farmers or Westfield cards are great presents for Nieces and Nephews etc.

That's the society-friendly audience: uncles and grand-parents and children.

That's why I recommended limiting it to $100.

At $100, most criminals will no longer use.

Gift cards sound innocuous, but enable a lot of crime, by making it difficult to track proceeds of crime.

I think casinos, using chips, have the same problem. They were forced to tighten up their act by the US federal government. Not sure if that's a problem here.

gzt

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#2774557 8-Sep-2021 15:40

I've been caught by expiry a couple of times. Expiry is annoying. They have the advantage of inflation already and then they have it all : ).

richms

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#2774621 8-Sep-2021 15:59

I dont see the point unless you are buying a gift for someone who has a drug or alcohol problem and cant be bothered to think of an actual item to get them. Otherwise cash is better, or just paypal them money or something. Gift cards give the buyer of them nothing in exchange for the risk unless the place has a promotion on buying them and even then there are limits on the use of them in stores.

Just regulate them like any other bank and see them disappear IMO.

Richard rich.ms

blackjack17

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#2774660 8-Sep-2021 16:51

gzt: I've been caught by expiry a couple of times. Expiry is annoying. They have the advantage of inflation already and then they have it all : ).

Westfield will reissue.

I had a student give me a westfield card for tutoring her during lunch times. I never go to malls and it expired. Happened to be in a mall and asked about it and they just reissued it no questions asked.

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