Online auctioned gift cards possibly a scam

McLEAN, Va. (8/7/07)--If you're a frequent visitor to eBay and other online auction sites, you've probably seen an increase in gift cards for sale. Before you throw one of these enticing discounted cards into your "shopping cart," realize it could be part of a new cyberscam (USATODAY.com July 23).

Security experts are calling it cyber money laundering, or e-fencing--yet another way thieves are converting stolen data into cash.

Here's how it works: A thief steals someone's credit card number and purchases a gift card online. The thief then turns around and sells it to the highest bidder on an online auction website or for a discount at a so-called gift card exchange website.

Though it's tempting to take advantage of this so-called bargain, your best bet, according to the Federal Trade Commission (FTC), is to purchase gift cards from sources you know and trust, and to avoid buying cards from online auction sites.

Tower Group, a market research firm headquartered in Needham, Mass., predicts that financial institutions and retailers will issue a record $97 billion in gift cards this year, up from $82 billion last year.

Whether you're purchasing a gift card for someone else or you've received one, the Office of Thrift Supervision and the FTC offer these tips:

• Card use. Check terms and conditions. There may be limitations on where you can use the card. Must it be used at the physical store or can you use it online as well? Check to see if you can use it internationally.
• Expiration date. Does the card have one? Some cards expire as soon as six months from the date of purchase; some won't expire at all.
• Fees. The most common fee for gift cards, and probably the most aggravating, is a fee for not using the card. Go figure. After a period of time, say one year, you might be charged something like $2 a month if you haven't used the card. It's best to use the card soon after receiving it.
• Replacement. Check to see if the card can be replaced if lost or stolen. If you can get a replacement card, most issuers will make you provide the identification number of the card--write it down and keep it at home.
• Balance inquiry. Find out if there's a way to check the remaining balance by phone or Internet.
• Add value. Can you reload or add more money to the card? If you can, check to see if there is a fee for doing this.

courtesy of cuna.org