All a Connecticut volunteer fire department wanted to do was raise money to buy new equipment. But its decision to raffle five $500 American Express gift cards created more embarrassment than profit.

All of the gift cards were virtually worthless, said Joe Kaliko, a patrolman with the Cos Cob Fire Police Patrol, a tax-exempt charitable organization affiliated with the Greenwich Fire Department in Greenwich, CT.

“Two of the cards were used up by unknown, unauthorized users who made online purchases at Wal-Mart. A third card was used to make purchases at a Nordstrom’s in Los Angeles and only had $4.21 left on it when the winner tried to use it,” Kaliko explained.

“We’re still trying to contact the remaining two ‘winners.’ But we’ve already learned one of the two has been has been going nuts trying to get American Express to restore the full value of her card.”
Kaliko bought the gift cards himself last February at an American Express Travel Service office in New York City. The cards were stored in a safe until the raffle last month.

The fire department had no idea the cards were worth less than face value when they distrubuted them to the winners, Kaliko said.

Retail Decisions, a company that analyzes questionable sales data and monitors about 14 billion card transactions annually to determine retail trends, describes gift cards as a top target for fraud. “It has become increasingly easy for criminals to fraudulently load value onto gift cards,” CEO Carl Clump said. Gift cards have unique serial numbers embedded in their magnetic strips. Retailers can track the balances and usage via centralized computer systems, which also give consumers the convenience of using their cards in locations nationwide.

However, techn-savvy scam artists reportedly use hand-held magnetic scanners to copy those serial numbers from the back of gift cards that are available for purchase in retail stores. They take a card off the rack, use the scanner to copy the serial number and then put the card back for someone to buy. Once an unsuspecting consumer pays for the gift card, the thief transfers the stolen serial number to a gift card he already has in his possession. By transferring the serial number, the thief also transfers all the money the consumer loaded onto the card.

American Express has replaced all five gift cards for the volunteer fire department, and added a $100 bonus card for the fire department to use itself. As far as the volunteers are concerned, it’s money they worked unexpectedly hard to earn.

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