Gift Card 'Draining' Scam Hits Los Angeles: What To Know

LOS ANGELES, CA — Holiday shoppers are being warned of a scam that has hit the Southland called gift card "draining" that results in gift-card recipients ending up with a worthless piece of plastic.

Los Angeles County Supervisor Janice Hahn Thursday held a news conference after she personally fell victim to the scam, she said. She recently bought a $100 Visa gift card for her nephew's birthday. When he went to use the card, "all the money had been drained from it," she said.

"I got ripped off. But I found out I was just one of many victims of this growing gift card scam," she said.

There are two methods scammers use to pull off the scam.

Scammers can attach a barcode from a card they already bought to an unsold gift card in a store. When someone who intends to buy the new card brings the card to a cashier, they are actually loading money onto the scammer's card.

They can also steal the details of an unsold gift card and place it back on a store rack. The scammer quickly drains the money from the card once it's sold, according to Hahn's office.

Hahn called on retailers to protect customers from the scam by placing gift cards behind glass and training cashiers to better recognize altered cards.

Hahn had purchased a Vanilla-branded gift card. The San Francisco City Attorney last month filed a lawsuit against the maker of those cards, Incomm Financial Services, claiming the company has failed to address card draining scams.

“Incomm’s negligence has opened the door for scammers to defraud thousands of consumers,”City Attorney Chiu said in a release. “To add insult to injury, Incomm regularly refuses, in violation of state law, to refund consumers who are scammed out of their money as a result of Vanilla gift card draining.

"For over a decade, the company has ignored hundreds of consumer complaints calling for security improvements and refunds for fraudulent charges. As we kick off the holiday season, we are filing this lawsuit to sound the alarm, compel Incomm to adopt industry-standard security features to stop card draining, and obtain restitution for consumers who have been harmed.”