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Mastercard Gift Card Fraud! Why This Incident’s Especially Concerning

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Mastercard Gift Card Fraud

Stuff happens.  Many points and travel hobbyists, especially extremely active ones, encounter unwelcome surprises on their way to more rewards.  Gift card fraud is one example.  I’ve experienced it from time to time, but not recently (knock on wood).  An MtM Diamond member on the West Coast just took a hit, though.  And what he discovered is a concerning development.  Here’s the Mastercard gift card fraud he experienced and what you should watch out for.


The Diamond member recently bought several US Bank Mastercard gift cards at Ralph’s, part of the Kroger family of grocery stores.  He didn’t notice anything suspicious with the card packaging at purchase but admitted not closely inspecting each item.

Mastercard Gift Card Fraud

When the member opened the gift card packaging, he discovered a “Cal” gift card matching the package (normal) and a cut-in-half Visa gift card (not normal) – see the above photo.  Tearing off the paper tab prior to purchase exposed the rear of the Visa gift card.  Perhaps some of you know where this is going.

The member looked at the activation receipt and confirmed that the Visa gift card had been activated, not the Mastercard he thought he was buying.  Based on how the fraudsters cut the Visa gift card, there was no CVV.  Therefore, he couldn’t check the Visa gift card balance.  It appears this scam using parts of actual gift cards is more sophisticated than the printed barcodes from a few years ago.


Subsequently, the Diamond member called the number on the card back and provided information on each card (both are US Bank-issued).  Not surprisingly, the rep confirmed that the Cal Mastercard was never activated.  Instead, the member had unknowingly activated the Visa card, but luckily, automated fraud monitoring had already frozen this card.

As directed, the member to fax copies of the following items: driver’s license, receipt, and rear photos of each card.  He also included a letter explaining the issue and front photos of each card.  The rep advised to wait up to three business days for a follow-up call with next steps.


Fraudsters are increasingly clever.  That shouldn’t surprise any of us.  This incident is just a reminder to carefully inspect each gift card package before purchase, including a deeper examination of the interior.  Also, ensure to open, check the balance, and use each gift card as soon as possible after purchase.  While monotonous, it’s just part of the deal to play the game at a higher level while avoiding fraud, in my view.  For many, simply avoiding these types of gift cards may be the optimal move.  Indeed, most of the gift card fraud I’ve experienced has been with US Bank gift cards.  On the bright side, US Bank has always made me whole in these situations, and I expect the Diamond member will be, as well.

Has something similar happened to you recently?  How did you resolve it?

Disclosure: Miles to Memories has partnered with CardRatings for our coverage of credit card products. Miles to Memories and CardRatings may receive a commission from card issuers.

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Benjy Harmon
Benjy Harmon
Benjy focuses on the intersection of points, travel, and financial independence (FI). An experienced world traveler, husband, and father, he currently roams throughout the USA close to expense-free. Benjy enjoys helping others achieve their FI and travel goals.

Responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.


  1. Had an issue where a VGC didn’t get activated but I was charged the $200. Resolved quickly. But hesitant about buying so many of these cards.

  2. Yup. Bought a bunch at Walgreens. When tried to use, no balance. I called Incomm and fraudsters drained about 5 of them on the play store and Walmart… one even bought a Walmart membership. They said these were most likely compromised before I bought them. So on the good ones I had left, I just requested a cash refund instead of dealing with in the future. You need the card and receipts and it takes 3 months to process the claim. Never gonna buy these again

  3. I live in Miami and I was at a CVS store once and one of the employees was speaking to a guy showing him fraudulent apple GCs and what to look out for, it was really clever how they re-packaged them.

  4. Recently learned about using Kroger Pay at Ralphs to trigger the 3x for online grocery on my CSP, but stories like this keep me from trying to scale that up. Good luck to your Diamond member in getting this resolved.

  5. One grocery store manager told me that he suspects the cards are already compromised when they are delivered. Perhaps by the guy who delivers and stocks them.

  6. A few weeks ago, I purchased a USB VGC at a Ralphs in Burbank. I opened the package at home and found it was missing a PIN card and the card’s 3-digit CID was scratched off. Without the CID I couldn’t register the card, check the balance or change the PIN. I called the number on the card and they said the balance was intact and i should be able to use the card in a physical store where the CID and PIN wouldn’t be required. Of course, this didn’t work at a local Target store. Another call, and I asked for a replacement card to be sent. They requested all the paperwork you mentioned in your post above to be faxed (apparently they don’t live in the 21st Century). After a few weeks on no contact from USB I called again and they said the balance had been drained in multiple small transactions at stores around the L.A. area. After a bit of a “discussion” the CSR asked a few questions to initiate a fraud case. A replacement card arrived in the mail a week later. However, they charge a fee for the replacement card and the balance wasn’t what I paid for. FYI – I spoke with a manager at the Ralphs store and she said they sometimes observe people in taking or replacing loads of gift card packages on the racks. However, since they cannot, or don’t want to hold these persons (presumably concerned about employee safety), they are gone by the time the police arrive. She also mentioned its not only Visa and Mastercard Gift Cards that are tampered with – she bought a Target gift card for a family gift and that was drained by the time the recipient tried to use it. In future, I would be sure to open the package in the store before purchasing and look for signs of card tampering, checking for a PIN card or, in some cases, a PIN printed inside the package.

  7. Our local police posted on NextDoor about increasing gift card fraud where they steal a bunch of cards then remove the part covering the PIN and recover it and glue the packaging back together. Then they restock them and somehow get notified when the card is sold and activated, then they transfer the balance so the real buyer has a $0 balance when they go to activate it. It seems like a ton of work (and unclear how they get notified that the card is sold) but the police claimed to have found $6,000 worth of doctored cards in 1 hour at our local shopping center. Good reminder to activate ASAP and keep receipts.


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