Every year, consumers in Connecticut and across the country purchase gift cards as convenient, flexible gifts for friends, family, and colleagues. However, a growing and alarming trend threatens the integrity of these transactions: organized gift card fraud.
Gift card fraud is rapidly emerging as a new element in Organized Retail Crime (ORC), defined as “the large-scale theft of retail merchandise with the intent to resell the stolen items for financial gain. Often this involves a criminal enterprise utilizing groups of individuals to steal large quantities of merchandise from multiple stores across several jurisdictions.”
Today, sophisticated, multinational criminal rings — some with ties to transnational organizations — are exploiting current laws to steal millions from unsuspecting consumers and businesses. Gift cards are the new frontier. Tactics range from card tampering and barcode swapping to high-tech hacking of redemption information.
This is not just petty theft — it is serious, organized crime that fuels larger illegal enterprises, including money laundering, drug trafficking, and even human trafficking. Unless we act promptly and effectively, it will only get worse.
The Connecticut legislature is currently considering legislation that would provide law enforcement in our state with the tools necessary to crack down on Organized Retail Crime, including gift card fraud. Senate Bill 1321 is needed and necessary, updating Connecticut’s existing statute to respond to the increasing threat posed by Organized Retail Crime. These issues are prevalent nationally, and of concern here in Connecticut.
Gift card fraud is not an isolated issue, it is a systemic and growing threat that requires immediate attention. Criminals have found ways to manipulate gift cards before they even reach consumers, rendering them worthless upon purchase. Retailers and gift card networks have taken extensive steps to protect consumers and businesses. Advanced technologies, such as encrypted QR codes, dynamic PINs, and real-time fraud monitoring, are being implemented to detect and prevent fraud before it happens.
To further strengthen consumer protection, retailers are training employees to recognize fraud and scams in real-time. Store associates are being educated on the latest tactics used by criminals, enabling them to identify potential scams and warn consumers before they unknowingly purchase compromised gift cards.
Additionally, the retail and gift card industries are working closely with state and federal law enforcement and agencies, to track, investigate, and dismantle fraud networks. In our state, the Connecticut Retail Network works closely with the Office of Chief State’s Attorney and the Attorney General’s Office on the various aspects of Organized Retail Crime, and there is agreement that Connecticut’s laws need to be updated and strengthened.
The retail and gift card industries have taken significant steps to protect consumers, but cannot fight this battle alone. Lawmakers, law enforcement, and the public must join with retailers in cracking down on these fraudulent schemes before they cause even more harm.
Law enforcement must be equipped with specialized training and resources to effectively identify and combat these increasingly sophisticated fraud schemes. Prosecutors need legal tools that specifically address unauthorized possession and use of gift card redemption information.
Passing legislation that establishes clear criminal penalties for all forms of Organized Retail Crime, including gift card tampering, scams, and unauthorized use of redemption information, is crucial. By implementing stronger legal penalties, increasing collaboration between industry and law enforcement, and enhancing consumer education, we can stop these criminals and solidify trust in the gift card ecosystem.
Now is the time to act. The tactics utilized by those involved in Organized Retail Crime are broader than ever, and it is imperative that our laws encompass these methods in Connecticut ’s response. We urge our senators and representatives to approve legislation in the current General Assembly session that strengthens consumer protection and gives law enforcement the tools they need to prosecute Organized Retail Crime, including gift card fraud.
Together, we can ensure that gift cards remain a secure and trusted option for consumers and businesses alike, and take tangible steps to deter and reduce the very real threats to businesses, employees and consumers posed by Organized Retail Crime.
Tim Phelan is president of the Connecticut Retail Network (CRN). CRN represents roughly 42,000 retail establishments in Connecticut, supporting more than 470,000 jobs and contributing more than $34 billion to our state’s economy annually.
Source: CT Insider