Jesse Jones: Gift cards come up empty as scammers take hundreds of dollars

Rhonda Burress bought a $100 gift card and when she tried to use it, it came up empty.

“It was just so unbelievable, because you would never you would never think that something like that would happen,” she said.

The security numbers were scratched out and a thief bled the card dry.

Todd Edlin bought $5,000 worth of cards in bulk to give to clients. But when he tried to use the cards, he said most of the cards were either empty or close to it.

“They don’t have a scratch off pin number and they don’t come through a middleman,” he described. “I thought they came to me in an envelope directly from American Express.”

Some gift cards may say Vanilla, Visa, Itunes or American Express. But the vast majority of them come from one place: a company called Incomm. Incomm handles processing and customer service for most gift cards. Attorney Graham Lippsmith filed a lawsuit against Incomm on behalf of Vanilla gift card users.

The lawsuit says the theft could be an inside job from rogue Incomm employees, “if that’s happening thousands of times. Tens of thousands of times. Millions of times.” Lippsmith says it could be a breach of the company’s security systems or bad actors who’ve found a way to beat Incomm’s algorithm for creating card numbers.

The lawsuit asks to make the victims whole by replacing the money that was supposed to be on the cards in the first place.

Rhonda wants the someone to be held accountable. In her case, she got taken the old-fashioned way. Sometimes thieves take cards out of the stores and steal the account numbers. They repackage and replace the cards and wait to cash in when the real customers put money on them.

We asked the Washington Retail Association if this was a result of organized retail theft, a growing problem in our state.

“Absolutely -- unequivocally,” said Mark Johnson with the Washington Retail Association.

He believes if the gift card issues don’t clear up, they need to be locked up behind the counter.

But what about people like Ron Lowe? His charity gave a $500 gift card to someone who had been the victim of abuse.

“They told me it had been deactivated because of fraudulent activity,” he said. “I said there could have been no fraudulent activity. I bought that card, walked out of the store to the parking lot, handed to this lady, and she tried to use it.”

Incomm says it does not comment on active litigations but says it takes concerns from cardholders very seriously.

According to the retail gift card association, these are the best ways to protect yourself:

• Check cards for tampering at purchase.
• Buy cards directly from retailers.
• Store cards securely.
• Never share account numbers or PIN with anyone
• Use them immediately.
• Keep the receipt.

More people say they were also impacted by compromised gift cards.

Barnatsky Betts purchased a pre-paid debt card and loaded $500 on it. When he went to use it, it didn’t work. He bought the card a drug store, and says he called the company many times and never once talked to a real person. He was not able to recover his money.

“Mad, mad, mad world -- mad, mad world,” he described. “I’m beyond man, I’m frustrated because, a lot of people just don’t have $500 to throw away like that. Good thing it wasn’t my last.”

Tony Ramos has a similar story. He purchased two $100 gift cards. He sent the cards to his girlfriend, who said neither of them worked. His problem: when he tried to get someone from the company, no one would help him.

“It’s not the first time and I haven’t received anything -- I want to show them and see what they can do,” he said. “‘It’s not our problem; once you buy the card, it’s your problem,’ and it’s like you’re taking Vegas. If you bring in money, you expect to lose it. It shouldn’t be that way.”

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