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Red Star Gift Card Scam

Recently, ¬†launched a conflictual marketing stunt, where the company sends “Free $500 Gift Cards” to consumers via snail mail. The catch is a 9% of sale shipping and handling fee which tags along. Consumers are responding with mixed feedback regarding this ploy along with some confusion.

Is this card too good to be true? What REAL benefit does it hold? Should I toss it? We’ve analyzed the pros and cons, based on consumer feedback, in order to assist your decision on how you might use this Red Star gift card.

The Cons

Public response has shown that many consider the potentially decisive means of advertising this shipping cost is a characteristic of poor business morality.

Others are quick to point out a more complex scheme. Customers have stated that the merchandise is of poor quality and inflated prices which in turn may result in shipping and handling fees costing the consumer more in the long run.

It is important to note that the cards following the initial launch carried print stating “Free Gift Card” but the company has since removed these words from their mail-outs.

The Pros

Many others report that they have used the card and the site without problem or concern. A number of individuals actually, business owners included, rebutted to these SCAM cries saying that this is simply clever marketing. Not only did it stir viral conversation, but many consumers are actually content with the 9% charge.

Feedback seems to be based on discrete review. Basically, those who enjoyed the product, enjoyed the promotion.

Ways to Avoid Gift Card Scams

There have been a variety of scams people have fallen victim to when trying to redeem their gift cards. Here are a few tips and situations to help you avoid being ripped off of your money.

1. After purchasing the card immediately write your initials on the back of it in permanent marker.

When an unknowing consumer goes to use their gift card at the place of purchase, the cashier will switch the card with a different one containing no value. When the cashier tries to verify the card and the value is zero the consumer is out of luck. Don’t let this happen to you by just writing your initials on the back of the card you won’t be fooled by such a trick.

2. Scratch off the account & pin number on the back of the card & write it down while also registering your card online

Scammers will copy down the account & pin numbers off of cards in stores like Walgreens that sell gift cards to a variety of places like Olive Garden,  Best Buy, and Barnes & Noble. They will then call and look up to see when the card was activated and if so they will use the account number to shop online. If you card is registered to your name and you can prove ownership with the account and pin number you will be able to retain the value.

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Gift Card Fraud – 6 arrested in $1 million gift card scam

Six women, who are being called by Police as “The Richmond Girls,” were arrested in Sacramento, CA for allegedly encoding stolen credit card information onto gift cards, then using them to buy more than $1 million worth of merchandise at area stores.

According to the Sacramento Bee, Investigators allege that the women purchased more than $540,000 in goods from Target and Wal-Mart alone. The women are part of an international crime ring and wired more than $120,000 to Eastern Europe, including Russia and Ukraine. Investigators believe the transfers paid for stolen credit account numbers from foreign banks. The numbers were re-encoded onto gift cards using equipment legally bought over the Internet.

One of the reasons why they were able to get away with their crime was that unlike credit cards, gift card users are not required to show ID since gift cards are considered the same as cash. And if a card was declined, instead of becoming suspicious, most clerks may incorrectly assume that the gift card value has been used up.

This is very scary. As always, it is a good idea to check your credit card statements or regularly log in online to make sure nothing unusual is going on with your account.

Gift Card Fraud & Scams Series – Part II

Gift Cards Stolen from the Mail at the Post Office

In case you have not been following this series on Gift Card Fraud and Scams, Part I of the series, which was posted last week, talks about secret credit card recording and how that is used to perpetuate gift card fraud. Today’s post will focus on gift card fraud at the post office.

I posted this article back in march 2008 – Gift Card Alert: USPS may have lost the gift card you mailed alerting readers about the need to properly package gift cards before they mail them since it appears gift cards are being lost at the post office due to improper packaging.

While the post office places the blame for missing gift cards on customers, it appears a few bad apples among the post office employees are taking advantage of the situation and may be going as far as stealing gift cards from mail that may have been properly packaged.

A recent arrest of a McAllen, TX postal worker for stealing gift cards from the mail got me curious. I did a quick search on Google news and came up with similar post office arrests over the last year or so, including the following:

April 24, 2008 – Charlottesville, VA (A Postal worker pleads guilty to stealing mail that contained money and gift cards)

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Gift Card Fraud & Scams Series – Part I

Secret Credit Card Recording & Gift Card Windfall

As I mentioned on May 10th, in celebration of the newly redesigned, I will be running a four part series on Gift Card Fraud and Scams.

I will be discussing the major types of gift card scams out there and provide you with tips on how to avoid becoming a victim. Today’s post will focus on credit card skimming and how that is used to perpetrate gift card fraud.

A recent arrest of two men in Herkimer, NY has led police into what could be one of the most sophisticated gift card and credit card schemes out there. According to a story on, police seized about 100 debit and gift cards from the two men, which were apparently used to defraud local Wal-Mart stores.

The case began to unfold as one of the men tried to buy $800 in Wal-Mart gift cards using multiple credit cards that were each denied. Police found that during the two day period, the suspects had purchased $39,000 worth of Wal-Mart gift cards and electronic equipment in Herkimer and Rome, NY. At the Rome, NY Wal-Mart alone, the two men made about $8,000 in purchases in one hour. So how does the scheme work?

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