Maryland Becomes First State to Pass Law Against Gift Card Draining

Maryland has introduced a groundbreaking measure to tackle gift card fraud with the Gift Card Scams Prevention Act of 2024. This legislation aims to curb the widespread issue of gift card draining, where thieves steal card information and use up the funds before the rightful owner can.

A woman is looking at a gift card while on the phone.Photo byAARP

Key Provisions

• Secure Packaging: Gift cards sold in stores must now be encased in secure packaging to prevent illegal access to their numbers.
• Online Registration: Merchants selling gift cards online must register them with the Office of the Attorney General's Division of Consumer Protection.
• Employee Training: Sellers are required to train employees on detecting gift card fraud

Impact of the Scam on the Community

Gift card scams have surged, particularly during the pandemic. Criminals obtain gift cards, deplete the funds, and then return the cards to store shelves, leaving consumers with empty cards.

• Consumer Losses: The Federal Trade Commission reported $228 million in losses from gift card scams in 2023.
• Widespread Issue: Approximately one-quarter of U.S. consumers have given or received gift cards that were already drained of funds.
• Organized Crime Involvement: Chinese crime rings have been notably involved in this type of fraud, using it for illegal gains.

Government and Expert Response

Experts highlight the susceptibility of gift cards due to their barcodes and PIN numbers, which are often only protected by scratch-off stickers. To combat this, the U.S. Department of Homeland Security has initiated a task force to address gift card draining.

Maryland's Gift Card Scams Prevention Act of 2024 serves as a model for other states. By enforcing secure packaging, mandatory online registration, and employee training, this law aims to safeguard consumers from the increasing threat of gift card fraud.