Why You Should Avoid Gift Cards At All Costs – Fraud Sucks

Just about everyone has bought or used at gift card at some point in their lives. What people rarely think about is how risky gift cards really are. Gift cards, unlike credit cards and debit cards, have almost no consumer protection whatsoever.

Most Gift Cards Are Just Like Cash

Most gift cards are just like cash. Whoever has the gift card can use the gift card. No one looks to see if the gift card belongs to you or if your name is on the gift card.

Heck, if you use your gift card online or are using an e-gift card in person, all you need is the gift card number or a print out of the gift card information. You don’t even have to present the gift card.

If You Lose Your Gift Card It’s Gone Forever

Unfortunately, this leaves gift card holders open to the very real possibility of losing the value of their gift cards to shady individuals that care nothing about you or the fact that the gift card belongs to you.

If you lose your wallet or purse with a gift card in it, unless you somehow have registered the gift card and know how to cancel it immediately, there is a real chance that the person who found your wallet or purse has already emptied the gift card of every penny that was on it.

You Can Lose Your Gift Card To Fraud

Physically losing the gift card itself isn’t the only way to lose the valuable money on your gift card. Sometimes, fraudsters can steal gift card information without even having access to your physical gift card.

Whether the fraudster discovers your e-gift card information through hacking a database or writing down the information on your gift card while processing a transaction, there are many ways you can lose the value of your gift card. The problem is, there is nothing you can do to fix it.

Companies Don’t Have To Do Anything About It

If your gift card information becomes compromised, most companies don’t have to do a single thing to make you whole. Unfortunately, gift cards are treated like cash in most cases and if you lose your gift card balance, you’re out of luck.

Unlike with cash, you can’t even physically guard your gift card information. Since you have to give the gift card to a server or cashier in order to use it, they can skim your information without you even knowing. At least with cash you can tell their supervisor they didn’t give you the correct amount of change.

With gift cards you have no recourse or even knowledge that your information has been compromised. So why am I so motivated to share this news with you? I’ve recently had an awful gift card experience… Keep reading to find out how bad it was.

My Recent Awful Experience With Gift Cards

I recently was awarded a $200 gift card to a popular sit down restaurant chain a couple of months ago. I was excited because this meant we could dine out many times without paying a dime of my own money! I thought that was a pretty sweet deal.

We didn’t get around to using the gift card immediately, but this past weekend we decided to go out to that sit down restaurant. Since my gift card was actually an e-gift card, I went online and grabbed the information I would need. I was getting ready to print it out when I decided just to double check the balance… I was shocked by what I found.

Someone Had Fraudulently Used My Gift Card!

I was shocked to see my balance on the screen. Instead of the $200 I was expecting, the balance showed only $15.05 left! At first I thought it was a mistake, but then I realized what had really happened. Someone fraudulently used the e-gift card I was rewarded! UGHHHHHH!

I Called The Gift Card Company

I called the gift card company to see what they could do. Unfortunately, it was the weekend and all they could do was say they’d turn it in to corporate and I should hear back from them within 3 days. They didn’t offer me any other solutions or information, because they claimed not to have any other than to have corporate review it.

They did verify that someone used the gift card just the day before for the $184.95 that was missing from my gift card. They had a store number, but that didn’t help me at all since I don’t know their store numbering scheme. All I can do is wait and hope that the gift card company will do the right thing and reinstate my $200 gift card balance.

At no time did I compromise my e-gift card. It remained in my email and I never forwarded the information to anyone. I never printed out the e-gift card information and there was no way someone else could have gotten it from me. Somehow, whoever used my e-gift card figured out a way to use my card without my knowledge!

I’ll keep you all updated as soon as I have some more information, but at this point in time I don’t have much hope. Let this be a warning to everyone who has or uses gift cards. Beware of the risk you take!

Have you ever had any problems with gift cards? I’d like to hear your stories and see if there are any solutions to this problem.

**UPDATE** Since writing this, I’ve heard back from the restaurant chain. They did the right thing and realized the purchase was made over 500 miles from my current address and will be issuing me a new, physical gift card for $200. YAY!

They said that the gift cards have number sequences which, if a number was keyed in wrong, could lead to the wrong gift card being charged. I believe this is why they’re mailing me a physical card to use. Kudos to the chain for doing the right thing!

Like What You See?

Join the other readers who have signed up for our email newsletter! No spam, just periodic updates to help improve your finances!

About Lance Cothern

Lance Cothern, a Certified Public Accountant (CPA) licensed in the Commonwealth of Virginia, is the founder of Money Manifesto. You can read more about him here or connect with him on Facebook, Twitter, Google+ or Pinterest.


  1. Interesting. I think most gift cards have a ton of numbers and they’re not supposed to be in sequence so that someone couldn’t get a hold of one number and then just go in sequence from there. You’d think that would eliminate the possibility of it ‘being keyed in wrong unless the company in question is honestly that far behind the times.

    • I think they said it wasn’t directly in sequence, but there were some particular numbers in the card, if keyed wrong, that could charge the wrong card. I would think they would have tried to prevent that, too, though.

  2. Couple different scenarios to share….

    1. Bought a new Toyota in July 2013 – part of the promotion was by test driving any Toyota – I would receive a $50 Visa card from US Bank. Ended up buying the car – got the card in the mail…expiration date on the card = 08/15 Tried to use it on Xmas day online…did not work. Tried to go online to check it, did not work. Called 12/27/14 and per customer service – there was a $2.50/month fee and it’s now only worth $40.00, oh – and because I had to call in to ask..there was a $1.00 fee to talk to someone. NICE. So a $39.00 balance. ( in fairness the customer service rep did replace the $1.00 fee – after all it is Christmas ) It would have been NICE if the companies offering these cards would just list these simple “RULES OF EXPIRATION” on the page the card is attached to vs saying “please read your terms and conditions” Not on the 1mm print on the back of the card or some attached pamplet that is longer than my property tax and house mortgage combined.

    2. My ex-employer gave us CU Visa gift cards as a “bonus” for working on a project. They did this because if they give us cash on our paychecks we would have to have taxes taken out, whatever. $30 a pop for each project we completed. I found two of them in a drawer along with a $30 card I won at the company Xmas drawing from 2013 (last year) The company listed on the paperwork is ICUS-Prepaid out of Naperville, IL.

    Expiration dates on the cards – 10/18, 03/19, 11/19 – none of them work, none could be verified online and when I finally reached a customer service agent on the phone, she had no record of the numbers from the cards and the three digit codes on the back. She could offer no help and I’m out of almost $100 ?? Another Festivus miracle. And of course there was nothing she could do to help and when I held to ask for a supervisor – was disconnected….

    So beware of those cards, use them within the first month or two of getting them. Don’t save them up like I did. At least I was able to buy The Monuments Men on Amazon.com – watched last night and it was great. But for $150, I should have been able to buy a lot more. : )

    Disclaimer – all of this was my own fault for not paying attention. I’m 46 years old and pretty tech savy. I wonder how difficult it must be for senior citizens to figure this confusion out. So kids, NEVER, EVER buy your Mom or Dad or Grandparents gift cards!!

    I will say Amazon was great, I was able to load up a non expiring Amazon card with my Toyota balance and save the $28.46 I had left over.

    Happy Holidays everyone and Happy New Year!


Share Your Thoughts