High-Tech Theft Targets Gift Cards

Thieves re-encode gift cards with stolen credit card data on gift cards, spend thousands.

Remember when theft used to happen the old-fashioned way?

A thief would get access to someone's bank account or credit card numbers by physically stealing a purse or wallet.

While no doubt that type of crime still occurs, advances in technology are giving way to a new breed of criminal activity.

It’s called gift card re-encoding and ever since the development of the Randall Road corridor,  say they’ve seen this type of crime spread like wildfire.

So how exactly does it work?

The thief gets access to credit card information by using a card-scanning device that costs as little as $30, Algonquin police Investigative Sgt. Doug Lamz said.

That information is then re-encoded onto the magnetic strip of a retailer’s gift card. Thieves go into stores and buy thousands of dollars of merchandise using what may look like a $25 gift card, but is actually encoded with your credit card information.

The type of credit cards most prone to this type of theft are the ones that contain radio frequency ID tags embedded into them, Lamz said. RFIDs also are used in pet ID tags, I-PASS transponders and plastic tags to discourage shoplifting.

“Criminals looking to do this only have to walk next to someone to get the information from someone’s credit card,” Lamz said.

Algonquin’s proximity to Interstate 90 and its abundance of big-box retailers along Randall Road make it an easy target for criminals, Lamz said. In most cases the thieves arrive in carloads, coming from either Chicago or Rockford.

“The first place the criminal goes it to a Meijer or Walmart, or any other big-name retailer,” Lamz said. “Since these stores tend to be busy, no one is able to spot the fraudulent activity taking place at the self checkouts.”

Lamz said he remembers that when the iPad first came out, someone went into Walmart and bought 10 of them at once, using a re-encoded gift card. He surmises that the iPads were sold on the black market, leaving the credit card holder left with the damage.

Although women are the ones seen on surveillance video purchasing items from a store using stacks of re-encoded gift cards, more often than not, it is actually a group of men who own the imprinting equipment.

Lamz said that is why these cases are so difficult to solve — because the real culprits find desperate women to do their bidding.

Gift card re-encoding is happening so frequently to Algonquin residents and retailers that Police Chief Russell Laine said the department easily could use two more detectives, in addition to the already full-time detective, to work on solving all of its financial crime cases.

Algonquin is not an exception to gift card re-encoding. Nearby communities also prone to this type of theft include Elgin and St. Charles, Lamz said.

“They travel up and down I-90 and along the way they hit big-box retail stores with fake gift cards,” Lamz said. “It’s a problem that’s not going away.”


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