Buying a gift card? Watch out for gift card scams that leave you and your recipient empty-handed

CHICAGO - Planning to buy a gift card for a graduation or birthday present? You need to watch out for gift card scams that could leave your recipient – and possibly your bank account – feeling empty.

The Better Business Bureau said that one scam targets cards that have not been purchased yet. Scammers go to the gift card rack and scratch off and photograph the PIN. Then they keep calling the 800 number associated with the card, checking until someone has purchased the card and put money on it. They quickly drain the card before the recipient can use it.

"The scammers have found this is a new way to extract money from consumers that are really not educated on the pitfalls of buying things with gift cards," said Steve Bernas, CEO of the Chicago Better Business Bureau.

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Another gift card scam works like this. You get a Facebook message or a call from someone you think you know. Maybe they're pretending to be the utility company. They say they need money or you have an outstanding bill and tell you to buy gift cards to transfer the money to them. You buy the gift cards, and the scammer asks you for the numbers, including the PIN  hidden under the scratch off. Then they cash out the gift card money and vanish.

"Unfortunately, when you buy gift cards – and the scammer knows this – is once you give him that number, kiss your money goodbye," Bernas said.

There's a third way criminals use gift cards -- to drain a stolen debit or credit card without leaving too much of a trail. Chicago Police Det. William Heneghan of the CPD Financial Crimes unit said that they recently arrested two women, Tiana Trammell, 26, and Tjwana Rainey, 32, on charges of running a financial crime enterprise. Heneghan said Trammell and Rainey would meet men at bars in River North, steal their credit cards, then buy gift cards. Victims in that scam lost $8,000 to $10,000 apiece.

Retail stores are becoming more aware of gift card scams and taking extra steps to protect customers. CVS is training employees to be on the lookout and is requiring customers to read and acknowledge information about gift card scams at the register before they complete the purchase.

Here are some tips to avoid gift card scams:

• If you are buying a gift card for a friend or loved one, check the back to make sure the PIN is still covered up. Choose a card from the middle of the rack to be safe.
• If you are scammed, report to police immediately.
• Use credit card instead of your debit card, which will give you more consumer protection under the law.
• Don't use gift cards to pay for anything -- only give as a gift.
• Freeze your credit so large purchases cannot be made in your name.
• Contact credit bureaus if you think you were scammed.
• If you think you are being scammed on the phone, just hang up.