Has to be a scam, right? I can't figure out who wins in this scenario.
September 6, 2018 4:43 PM   Subscribe

Friend of mine works at a major retailer, call it Lacy's Department store. Out-of-state customer comes in with a brand new credit card and buys about $8000 in jewelry-rings & watches. Because it's a major purchase AND a new card, it automatically goes to approval through Loss Prevention. Friend gets paid in part by commission, so she's wary. Sure enough, within a week, every single piece is returned. But across six different non-contiguous states. But Lacy's doesn't return cash, gives store gift cards. This HAS to be a scam. But HOW?

It's happened to several of her co-workers, too. Loss Prevention has no clue how this could be a scam. We've racked our brains to figure it out. Short of a credit card points or cash back scam, we got nothin.
posted by beelzbubba to Shopping (8 answers total) 5 users marked this as a favorite
Steal the credit card, sell the gift cards for cash on Craiglist, when the card is reported stolen and the gift cards voided, the thief is long gone. I assume that's how it works.
posted by wnissen at 4:47 PM on September 6, 2018 [26 favorites]

There’s also a lot of online gift hard resellers that will but your gift cards for a % of the value so they don’t even have to find a direct buyer.
posted by artificialard at 4:58 PM on September 6, 2018 [2 favorites]

Many merchants don't have a system to tie a gift card to a specific transaction, so they can't void the gift card they handed over when the merchandise was returned. As others noted, those cards can then be sold - there's entire tiers of the black market that handle just that portion of it.

The credit card information was either stolen or they opened a new card with that person's identify. In either case, the fraud will be detected sooner or later and Lacy's will end up eating the cost and the person will the stolen identity will have a shitty month or four. Lacy's should step up their antifraud game.
posted by Candleman at 5:09 PM on September 6, 2018 [3 favorites]

Also as a note, even if they do start making gift cards revokable, unless the fraud has already been detected by the consumer, they'll just move to a model where they almost immediately buy something that's easy to pawn or sell on Craigslist like TVs once they get the gift card
posted by Candleman at 5:10 PM on September 6, 2018 [2 favorites]

Yep. Once you sell the gift cards, it's a matter of indifference to you whether they're voided--if that's even technically possible.

Loss Prevention seems to be being handled by Roscoe P. Coltrane. But I believe that in this case the loss will redound to the credit issuer, not Lacy's.
posted by praemunire at 5:25 PM on September 6, 2018 [1 favorite]

Identity theft to open the credit cards, sell the gift cards for cash == profit.
posted by TheAdamist at 8:06 PM on September 6, 2018

Large-scale professional scam.

Have a large ring of people doing this across the country:

- Open new cards fraudulently (identity theft), print fake IDs to match, ship them to buyers
- Buyers use cards to buy high-end items, and then ship the items to other people in the ring across the country
- Other people in the ring return the gifts and receive gift cards in return
- Everyone sells the gift cards online or to those machines that give you cash for unused gift card balances
- Everyone gets a percentage, with the largest cut going to the people running the ring (who are also likely the ones doing the identity theft and printing the fake IDs)

Rinse, repeat. Maybe sometimes you're the buyer, sometimes you're the returner or gift-card seller, and there's a group in the middle doing the identity theft and fraudulent card-opening. Everyone takes a cut of the profits, with the group in the middle taking the biggest cut.

Buyer probably wasn't even from out of state, just had an out of state ID that matched the identity that was stolen to open the card. This is probably happening on a wide scale across the country.
posted by erst at 8:43 PM on September 6, 2018 [6 favorites]

Large-scale professional scam.

Have a large ring of people doing this across the country:

This is the only way it made any sense to me. That it had to be professional, including ID theft, because the IDs completely matched and state motor vehicle licenses would not be easy for amateurs to fake. Shipping the goods to other states costs money, so there has to be volume to make it profitable up the chain. A robust market for gift card resale also makes sense to me. And it must be that the hit affects the credit card companies and not the department store would explain why the store seems like they don't care.

Thank you.
posted by beelzbubba at 11:02 AM on September 7, 2018 [2 favorites]

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