Walmart Thwarts $4 Million in Gift Card Scams

The retailer’s security teams flagged the fraud and alerted Secret Service—and some of the primarily older victims will get their money back.

April 06, 2022

Gift Cards

ALEXANDRIA, Va.—Walmart intercepted over $4 million in gift-card scams that were targeted primarily at senior citizens, reports CNBC. Through a strategy developed by Walmart, the company was able to identify the scams, alert the Department of Justice, which seized the $4 million and will release the money back to the victims.

In an affidavit filed in an Arkansas federal court, Walmart’s Global Investigations team in 2015 “noticed a pattern of regular inquiries from local police departments regarding reports filed by victims of unspecified scams” who had been directed to buy Walmart gift cards, usually in the sum of $500 and $1,000.

The investigations team then found store video footage of people loading cash on the gift cards that were in the police reports, and “a disproportionate number of the victims at the cash registers who loaded the Walmart gift cards were senior citizens,” a U.S. Secret Service agent wrote in the affidavit.

The video footage shows the victims using their phones to give the gift-card numbers to “unknown individuals” primarily located overseas. The gift cards were then used to make purchases shortly after the phone call in states that were different from where the card was loaded.

Walmart in February 2016 began tracking the checking of gift-card balances from overseas and developed a system to identify what the retailer believed were fraudulent patterns involving the cards, the affidavit said.

Walmart was eventually able to identify about 10,600 suspicious transactions with a value of $4.4 million. In July 2017, the retailer froze the gift card funds connected to the suspected frauds and contacted the Secret Service about the money.

In the first nine months of 2021, consumers reported losing $148 million in fraud schemes where gift cards were used to pay scammers, according to Federal Trade Commission (FTC) data. In comparison, $114 million was reported lost in gift card frauds for all of 2020, according to the FTC.

Last year, gift cards were the most commonly reported method of payment for victims of imposter frauds who older than age 60, and it’s rare for retailers to stop individuals from falling victim to the scams.

“It’s great what happened in the Arkansas case [with Walmart], but that’s the exception, not the rule,” a DOJ official told CNBC. “I suspect that a very small percentage of victims, particularly of gift card scams, get their money back.”

In 2021, the FTC issued warnings about gift-card scams, and the agency created a Stop Gift Card Scams Toolkit to help retailers do their part to prevent this form of fraud.

Last year, a gift-card scam targeting convenience stores in Georgia tricked the retailers out of $40,000. A scammer would call the store, pretending to be someone from the c-store’s corporate office, and would tell the associate that an FBI agent, U.S. Marshal or some other federal agent would be in contact with them and are wanting the money out of the safe or registers and telling them to load a gift card with money.

In 2020, a similar scam happened where someone called a c-store claiming to be a vice president or other chain official and told the store that a representative would stop by and collect receipts and money in a bank bag. The caller would provide the c-store with a confirmation number. Then the “official” appeared at the store and recited the confirmation number to retrieve the bag with the cash, usually while the clerk was still on the phone with the scammer.