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Warnings Over Credit and Gift Card Scheme

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After months-long investigations by the Secret Service in western New York, the feds have a warning for consumers and businesses about a scheme that uses stolen credit cards to buy reloadable gift cards.

"The reason that criminals want to put credit card value onto gift cards is because a gift card is in a sense just a wallet full of money," said Bill Hochul, the U.S. Attorney for western New York.

He warns you to be wary if your credit card leaves your sight, such as when you pay your restaurant tab. That’s one way crooks can get your account number. They can also buy account numbers online, install scanners to harvest them at points of sale, or use scanners that lift your number when your card is in your wallet in your pocket.

Hochul and Todd Laster, the Secret Service Agent in Charge in western New York suggest that businesses carefully identify someone trying to buy a lot of reloadable gift cards who offers several credit cards as payment.

"We would ask that you ask questions and try to verify, and that we've passed on to some retailers that if someone is coming in and attempting to make a large purchase of gift cards is to refer that person to customer service," said Laster.

He believes many criminals won't chance customer service looking closely and possibly uncovering the fraudulent transaction.

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Warren Clark, the President and CEO of the Better Business Bureau in western New York says he's concerned so few businesses have the new chip reading credit card machines and software. Those businesses are now liable for accepting fraudulent cards if they're not using new technology. That could get pricey.

"We, as the Better Business Bureau, have been pounding on this - get your new equipment and education because when it becomes a law enforcement issue, it's too late."

These experts agree, if a deal sounds too good to be true, it probably is. For example, if you are asked to buy a $25 gift card for $10.

Secret Service Special Agent in Charge (Buffalo office) Todd Laster, BBB of Upstate New York President Warren Clark and U.S. Attorney Bill Hochul
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Secret Service Special Agent in Charge (Buffalo office) Todd Laster, BBB of Upstate New York President Warren Clark and U.S. Attorney Bill Hochul

Watch for popups and misspelled words in the solicitations, and watch your bills for anyone else using your account.

The Secret Service says the loss to businesses from this fraud scheme is already more than 100-thousand dollars in western New York. The purchase of gift cards removes the risk of using a stolen credit card.