Gift card fraud has been a major issue this year in state legislatures as lawmakers look to crack down on thieves accessing and using money from stolen gift cards. Last month lawmakers in five states — Arkansas, Iowa, Kentucky, Tennessee and Utah — enacted sweeping legislation that creates the crime of gift card fraud and assigns penalties based on the value stolen from cards.
In a typical gift card fraud case, thieves steal unactivated gift cards from store displays, record their numbers in a special computer program, and return them to the store. Once a consumer buys and activates the card, the thief can quickly drain the funds. Stolen gift cards without value present an even bigger challenge for prosecutors since thieves can steal 50 or more gift cards and face little punishment.
Retailers and gift card manufacturers have been working in lockstep this year to ensure that prosecutors have legal room to charge thieves who access and steal money from stolen gift cards, even before they have value. Legislation enacted in Utah (UT HB 38) provides broad protections for gift cards with stolen values, but also any code or device that can be reloaded. Likewise, the bills signed into law in Arkansas (AR SB 302), Iowa (IA SF 266) and Kentucky (KY SB 130) create the crime of gift card fraud for stored value and open-loop gift cards. Meanwhile, Tennessee’s bill (TN HB 207) expanded its organized retail crime offense to include knowingly possessing 10 or more fraudulently obtained gift cards, with the intent to defraud another.
More gift card fraud bills could soon be enacted in other states. Industry advocates are monitoring 41 bills across 21 states that broadly follow the model of Ohio’s bill from last year that defines the offense of gift card fraud and provides sentencing standards that correspond with the stolen value.
Lawmakers in Florida (FL SB 1198), Kansas (KS SB 84) and Texas (TX SB 1809) have both sent bills to their respective governors on gift card fraud. And in Arizona, House lawmakers still have time to pass their gift card fraud bill (AZ SB 1351) as session days wind down in Phoenix.
