[00:00:25] Bob: Uh, they were helping the criminals in effect.
[00:00:27] Marti DeLiema: Yeah, in effect.
Welcome back to The Perfect Scam and this special two-part episode in gift card fraud.
I’m your host, Bob Sullivan.
Americans report theft of 50 million dollars via gift cards every three months.
We begin with an incredible experiment conducted inside stores a few months ago.
And what are the perspectives of retailers.
[00:02:30] Bob: That’s Elder Fraud Expert and University of Minnesota Professor, Marti DeLiema.
And we wanted to see, you know, how does that experience play out in practice?
[00:03:25] Bob: Heres how Marti designed the study which was funded by AARP.
There were some parameters.
And our plan was to have two people go into the store.
I’ll have to come back."
[00:04:56] Bob: The researchers worked hard to check that the experiments were fair.
So we actually rolled the dice to figure out which checkout line to go.
And whatever the dice rolled, that that was the checkout line that we chose.
So that way we weren’t choosing where to line up, it was chosen for us.
A typical situation, the kind of crimes we demonstrated last episode.
So a consumer gets a call from someone they believe works for the IRS.
At first, the role-playing isn’t so easy.
How did it feel?
[00:07:16] Bob: So after a while, the team gets good at running these simulations.
They quickly discover it’s easier to buy high value gift cards at some places than at others.
And the cashier usually tries to enter into the amount and activate it.
[00:08:02] Bob: There are limits, Marti’s team found.
Limits on the dollar value cards that can be purchased.
Limits designed; it seems to stop high dollar fraud.
[00:08:39] Marti DeLiema: Exactly.
[00:09:21] Bob: Uh, they were helping the criminals in effect.
[00:09:23] Marti DeLiema: Yeah, in effect.
[00:09:26] Bob: And circumventing the fraud protections.
[00:09:28] Marti DeLiema: Right.
Why are they a problem?
That seems, uh, that seems like a terrible state of affairs to me.
[00:10:31] Marti DeLiema: Right.
And if people do venture to pay with credit cards, sometimes they’re stopped.
So usually, typically customers are playing, paying with cash.
So we said, let’s up the ante.
Let’s make it, you know, 800 or 1000.
So you know it was between 400 and 1000 dollars that we were attempting to purchase in gift cards.
That just sounds like such a painful image to me.
[00:12:03] Bob: Marti’s findings weren’t all bad news.
Some stores did attempt to step in when the secret shoppers tried to buy unusual amounts on gift cards.
That actually seemed kind of optimistic to me.
What do you think?
[00:13:38] Bob: So that, that’s an important distinction.
They were trained to prevent stealing from the company, not stealing from the consumer.
So some of the things retail workers told the researchers were shocking.
Well, this part of the report I read twice.
And one of their priorities is to keep the line moving.
Or you have to ask, “So wow, this is a lot of gift cards.
Who are these for?”
All of that takes a lot of time.
Trust building takes time.
It’s a lot of effort.
[00:15:58] Marti DeLiema: Yeah, definitely it’s a hard thing.
Of course, not all managers felt that way.
Others, you know, saw this really as a priority to protect people.
I mean when does that ever happen?
[00:16:23] Bob: Right.
They’re not going to be detectives for this," right?
[00:16:42] Marti DeLiema: Exactly, exactly.
[00:16:48] Marti DeLiema: Right, right.
At some point, you know, it’s their money.
I have to let them spend it.
And we’ve heard that before.
[00:17:50] Bob: There were specific examples of retail workers stepping up and doing the right thing.
This is a lot of, you know, a lot of money.
There’s these scams out there, this is what they say."
So this person really knew about what was going on.
And she said, “You know, this happened to my friend.”
“Oh, this happened to me not long ago.
I lost a lot of money.”
Now, that’s not to say stores aren’t aware of the problem, quite the contrary.
The researchers spotted warning notices and their consumers in 80% of the stores.
So that was ineffective in my opinion.
[00:21:41] Marti DeLiema: Right, and signs take up valuable real estate for the store.
[00:21:56] Bob: So how should consumers interpret the results of Marti’s study?
You know there’s always this question of who do we blame?
[00:22:49] Marti DeLiema: We never debriefed the participants, or I should say cashiers.
[00:23:20] Bob: What would be effective?
After all, it is asking a lot of cashiers to become fraud experts.
And again, its free to U.S. retailers.
[00:24:57] Bob: I hope it doesn’t take another 20 years to fix it.
[00:24:59] Amy Nofziger: I do too.
Hundreds of millions of dollars in reported gift card fraud every year now.
I dont know why were not doing more.
[00:25:47] Bob: Why is gift card fraud such a tough problem to solve?
[00:25:50] Amy Nofziger: I just think that the desire’s not really there.
Its a very complicated in, in my opinion, industry.
Who owns the majority of the responsibility?
Is it the manufacturer of the gift card, is it the entity that sells the gift card?
Is it the brand on the gift card?
Is it the consumer?
But lets just take your local grocery store.
Look for a warning sign.
See what it says, and then in your mind start having dollar signs pop up.
She went to six home improvement stores across her area and bought all of these gift cards.
She has $10,000 worth of them.
Right, so sometimes the numbers are too big, and you want to bring it locally.
It does bring it closer to home and it helps people focus on it a little bit more.
[00:29:07] Amy Nofziger: Absolutely.
So thats why we all need to start paying attention to it now.
[00:29:20] Bob: Ticking time bombs.
So, they turned to gift cards.
And so if you think about prepaid gift cards, theyre everywhere.
Theyre at every grocery store, pharmacy, department store, home improvement store.
They are also untraceable, right.
There are hardly any ways that you’re free to trace where the gift card went to.
If I go to Target, I can probably buy a Walmart gift card at Target.
If I walk into a CVS, I could probably buy a Nordstroms card.
When clerks do attempt to stop consumers with questions, criminals are often right there with the answers.
That’s why training cashiers might help, but only so much, Amy says.
They couldn’t exchange them to get their money back.
And then, theyre out of that money too.
So again, its a very, very hard thing for these victims.
Its almost like theyre double victimized in these situations.
[00:34:45] Bob: The question is, who would implement such a change?
The gift card transaction process is not quite so clear.
And one that actually prints the numbers and the brands on the gift card.
And so, you know, wheres the incentive necessarily to, to stop this?
They sold it to them.
They just put the money on our card.
How are we supposed to know that it was purchased, you know, in a scam?
Who owns responsibility of it?
[00:36:16] Bob: What other changes might help consumers?
First off, higher barriers.
After all, consumers are certainly used to encountering barriers when purchasing many products like cigarettes and alcohol.
[00:36:48] Bob: What kind of solutions would she like retailers to implement on the back end?
They often dont get a human being; they get stuck in an infinite phone loop.
It, it strikes me that every second counts in a situation like that, right?
[00:38:27] Amy Nofziger: Yeah.
Due to COVID, we have nobody picking up the phone right now.
And it clicked off.
Or they say, go online.
[00:39:34] Bob: Its gone, its gone.
[00:39:35] Amy Nofziger: Absolutely.
[00:39:36] Bob: What an unfair race against time it seems to me.
[00:39:39] Amy Nofziger: Absolutely.
I mean the criminals are so adept at draining the funds off of these gift cards.
I load, you know, $10,000, or however much on all of these play cards.
I take a picture of the card.
I text it to them.
Right, there isnt a second to spare.
So when the consumer does realize this and does need quick intervention, its also not there for them.
So that’s one thing is training.
The second is the controls that they can place around the purchase levels of gift cards.
People have to see others as, as human beings they care about, right?
So, it’s, it’s all of us.
It’s not as uncommon as you think.
Cashiers do have the power to say I am not selling you this liquor.
I think that there is a history of, of this happening with other substances.
Why can’t we do it with gift cards?
[00:44:25] Marti DeLiema: Right.
Be sure to find us on Apple Podcasts, Spotify, or wherever you listen to podcasts.
For AARP’s The Perfect Scam, I’m Bob Sullivan.
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