New scam: Cloned gift cards, spyware that tracks reloading

Print
Email
|

by Ed Teachout, KGW staff

NWCN.com

Posted on September 21, 2010 at 9:20 PM

BEAVERTON -- A Beaverton man has been accused of creating the latest scam to steal people’s money -- cloning gift cards.

By electronically copying one gift card to another he stole more than $7,000 from customer's gift cards in less than two weeks. Thanks to quick action by police and Fred Meyer security guards the 22-year-old suspect has been stopped.

Gift cards are big business. The National Retail Federation estimates that consumers spend more than $50 billion annually on gift cards.

Retailers consider the pieces of plastic extremely safe and in the case of cloning gift cards stores lose no money.

“That’s because gift card cloners steal money from the customers who purchased the card, retailers have already been paid and lose nothing,” said Beaverton Police Detective Michael Hanada.

Last Spring Beaverton Police arrested 22 year old Sealtiel Zepada and charged him with theft and computer fraud

Detective Hanada said  when they delivered a search warrant to his Beaverton home, “we found thousands of blank gift cards and the equipment to clone them. Mr. Zepada outfitted his entire home with items he purchased with either customers cloned gift cards or with money he received by cashing out gift cards he had cloned.”

How it works

Criminals clone gift cards by first taking them off of store racks where they are basically worthless because no money has been put on them yet.

In fact it’s difficult to charge a gift card cloner with theft for taking them because they technically have no value, at least not yet. The cloner then uses an electronic card reader/writer to copy the information from one gift card to another, making an identical copy.

The cloner then takes the original gift card back to the store for unsuspecting customers to purchase them. Using a computer, police say Zepada was able to check public retail sites customers use to check gift card balances. With a sophisticated program, he was able to have his computer alert him once a gift card was activated, including how money was on it.

“Mr. Zepada would then rush to the store," Hanada said, "and either buy items with the cloned gift card or exchange it for cash before the real owner of the gift card could use it. He could just keep stealing and stealing because at the end of it, the merchant still has the money. It’s the customers who are out the cash.”

How to protect yourself

Fred Meyer spokeswoman Melinda Merrill said “gift cards are like cash which makes it very difficult for it to be replaced.”

She suggests customers use gift cards right away after receiving them so cloners have little time to steal from them. Customers should also check their gift card balances frequently so they can alert a retailer immediately if there is a problem.

Police praised Fred Meyer Stores for bringing this growing crime to them and working with them to stop Zepada.

Because of the massive amount of money retailers make issuing gift cards police say many are not taking steps to protect their customers.

“But Fred Meyer helped us arrest Mr. Zepada and since has taken steps to protect their customers so they won’t become victims of gift card cloners,” said Detective Hanada.

Since Zepada has no real criminal record and in the country illegally, police said he was deported back to Mexico.

Police said although this is the first gift card scam on the West Coast they know about, several people have been prosecuted for the crime back east.

Print
Email
|