Maryland Leads the Way in Preventing Gift Card Fraud
Maryland has taken a significant step in combating the growing problem of “gift card drain” scams. Governor Wes Moore recently signed the Gift Card Fraud Prevention Act of 2024 into law, making Maryland the first state in the U.S. to implement such proactive measures.
New Regulations for Gift Card Sales
Under the new law, retailers are required to package gift cards securely to prevent thieves from obtaining card numbers illegally. Additionally, merchants selling gift cards online must register with the Consumer Protection Division of the Attorney General’s Office. Furthermore, employees must undergo training to help them detect and prevent gift card fraud.
The Rise of Gift Card Fraud
This type of fraud involves criminals stealing gift cards, extracting the card numbers, and draining the balance before returning the cards to store shelves. By doing so, the cards become worthless when purchased by unsuspecting consumers. According to data from the U.S. Federal Trade Commission, gift card fraud has doubled during the pandemic, resulting in losses of $228 million by 2023.
Protecting Consumers and Combatting Fraud
Experts caution that without proper packaging, the funds stored on gift cards are vulnerable to theft. Thieves can easily access card numbers by removing scratch-off stickers covering barcodes and passcodes. To combat this issue, the U.S. Department of Homeland Security has established a task force to address credit card churning.
A 2022 report from the American Association of Retired Persons (AARP) revealed that approximately a quarter of U.S. consumers have experienced financial losses due to drained gift cards. The new regulations in Maryland aim to protect consumers and prevent further instances of gift card fraud.
