The gift card industry is booming — and so is related fraud and organized crime

Joan Oanes says she was baffled to learn a gift card she had purchased had been drained of all its money. 

The $50 Lululemon gift card was bought last October at a Shoppers Drug Mart location in Brampton, Ont., and given to her sister-in-law in December.

"The receipt is there. It says it's activated," said Oanes. "How come there's no money in it?"

Martin Paquette, in Oakville, Ont., knows the feeling. The $50 Sephora gift card he bought for his daughter for Christmas at Walmart was also emptied of its entire value.

"My daughter was embarrassed, to say the least," said Paquette. "We were informed that it was used for an in-store purchase on Dec. 25, which seemed a little strange to us because no stores are open."

The gift card industry in Canada is booming and is expected to balloon from about $11 billion in 2023 to nearly $14 billion by 2028, according to a 2024 report by Research and Markets. But where there's big business, there's also a big opportunity for theft, warns one expert, noting that consumers need to be aware of possible scams. 

"There's a lot of money to be made," said Joe Aversa, associate professor at Toronto Metropolitan University's Ted Rogers School of Retail Management.

"The fact that this is happening is not surprising to me and [thieves are] getting more and more sophisticated."

Experts say there are numerous ways fraudsters can steal gift card balances before the intended recipients can use them.

The cards are often displayed in kiosks on sales floors, allowing scammers to steal them and copy their barcode numbers and PINs or security codes before returning the tampered cards to the store.

The thieves then wait for the cards to be purchased and loaded with money by unsuspecting customers before they use the stolen codes and pins to drain the funds from the cards.

"If you buy it in the store, try to buy it in a store where the gift cards are locked up or in a drawer versus out in the open," said retail analyst Bruce Winder. "And spend it fairly quickly, too."

Winder says consumers have no protection from fraud when it comes to gift card draining.

"Right now, unfortunately, it's a risk that a customer has to eat."