Chinese Mafias' New US Goldmine: Gift Cards

ProPublica: 'Card draining' is a thing, and the feds have established a task force
By John Johnson,  Newser Staff
Posted Apr 14, 2024 5:45 AM CDT
Chinese Mafias' New US Goldmine: Gift Cards
Gift cards are displayed at a Target store.   (AP Photo/Richard Drew)

It's not your typical story about organized crime—ProPublica reports that Chinese mafia groups are ripping off American consumers and stores through mundane gift cards. And for the first time, the Department of Homeland Security has launched a task force to fight what's known as "card draining." The way it typically works is that low-level "runners" for the criminal gangs steal cards from stores, record the numbers and PINS, repair the packaging, then return them. "What they do is they just fly into the city and they get a rental car and they just hit every big-box location that they can find along a corridor off an interstate," says Adam Parks of the DHS. When legit customers buy a tampered card and load money onto it, the gangs can access the money. Meaning, when a customer finally goes to use it, the balance reads zero.

"We're talking hundreds of millions of dollars, potentially billions of dollars, [and] that's a substantial risk to our economy and to people's confidence in their retail environment," says Parks, who leads the "Operation Red Hook" task force. What's more, the Chinese mafia groups are believed to be using the profits to bankroll other operations such as drug trafficking and human smuggling. The story notes that Target, Apple, and Walmart have faced class-action suits from consumers who bought drained gift cards, asserting that the companies failed to properly secure them. Read the full story, which details how card draining is only one aspect of the various scams centering on gift cards. (Or read other longform recaps.)

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