Chinese Organized Crime and Card Draining

Americans are projected to spend over $200 billion on gift cards this year.

However, scammers are expected to steal hundreds of millions of dollars in a fraud scheme known as “card draining.”

Here’s how it works:

1. Someone steals a gift card and copies the card number and security code

2. They put the card back on the shelf at the store

3. Another person later purchases the card and puts money on it

4. The scammer then takes the money or “drains” the card of its funds before the owner can spend it

Federal investigators believe multiple Chinese criminal organizations are involved. Over the past two years, law enforcement has arrested nearly 100 people for card draining, of whom 80-90 are Chinese nationals or Chinese Americans, per ProPublica. 

Target, Apple, and Walmart are popular gift cards targeted by scammers. Target alone has seen $300 million stolen from customers due to card draining. Apple and Walmart have faced card-draining class-action lawsuits for their role in failing to protect consumers from fraudsters in this scam.

Another reason for you to get creative during the holiday season and pick an actual gift instead of a gift card :)

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