Internet and Credit Card Fraud in This Hobby Can Cost You – My True Story

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Tuesday, September 27, 2016

A Guest Post by John @laptoptravel

KROGER EARNS

woman-arrested_01

A lot of frequent flyers who are deeper into what many call ‘the hobby’ look for techniques and strategies to lower their cost of travel. Following RenésPoints blog, many of you are kept aware of strategies for flying cheaply to get great trips for less money or to get qualifying miles for status.

One of my strategies is to use methods to achieve elite status with hotels much like many do with airlines. Often, this requires a certain number of nights or stays in a year to reach a certain level.  Obviously, doing this at the least out-of-pocket expense is the goal.

Over the past two years I have noticed a trend of discounted gift cards being available for purchase online; many of these through gift card resellers such as Raise, GiftCard Zen and a few others. EBay also offered a slew of options on a regular basis.

As a Hyatt Diamond member, I regularly spend 25+ nights per year in one of their properties.  Platinum status can be earned by simply holding the Chase Hyatt credit card.  Diamond status can be achieved by either staying a minimum of 50 nights or 25 stays each year. The advantage of Diamond status comes with four annual Diamond Suite Upgrades that are confirmed at the time of booking (for stays up to seven nights) plus free club or lounge access. Additionally, a daily breakfast benefit is given to these top status members.

Which brings me to the point of this post; all strategies come with some form of risk. In my case, a hazard to earning status came at the hands of online criminals.

Over the course of the last eighteen months I would say I have bought more than a dozen hotel gift cards, all discounted and many for Hyatt Hotels. Using shopping portals on top of some discounted cards I have realized an average savings of about 17%.  There also have been some great exceptions…and there is where we pick up this story and a warning to buyers.

The old adage “When it’s too good to be true, it is” is 99% accurate.  I noticed that EBay had several Hyatt gift cards running at more than a 20% discount; some as much as 33%! In most cases, this should raise a red flag, but if you go and try to follow the seller’s history and feedback of selling you can sometimes mitigate your worries.

After some screening, I purchased a $500 Hyatt gift card for less than $400 and planned to use that as part of my re-qualification for Hyatt Diamond status this year.  I had many nights booked at various Hyatts throughout the U.S.

It did not take long until everything came unraveled. I always make my reservations using my Chase Hyatt credit card (stored in my Hyatt Gold Passport profile) and then present it at check-in. At that time I advise the clerk that I will be using a Hyatt gift card to pay the final bill.

Having recently done 16 Hyatts in 16 nights earlier this year, and utilizing the same strategy I had no worries. However, at checkout the next morning I presented my Hyatt gift card (actually an e-certificate, not a physical card) and was promptly told there was no value on the certificate. With no recourse at the moment I paid the bill with my Hyatt credit card and asked for the manager’s business card.

At the next opportunity, I contacted Hyatt Concierge (via Twitter) and in a brief conversation was told that Hyatt could not check on the certificates since I had not been the primary purchaser; in fact I was a buyer from a reseller.

hyatt-twitter-conversation-on-egift-card-balances_01

Having worked in law and computer science previously, I set out on a mission to learn more about my seller of this certificate.  At the same time, I filed a complaint against the seller with PayPal. After all, I was out a card valued at $500 with nothing to show for it except my purchase transaction.  By the way, you might want to read this article I wrote on PayPal’s changing terms and how that affects buyers of gift cards going forward.

PayPal was a little hesitant to offer any compensation initially.  That just made me more diligent in tracking down my seller.  Fortunately for me, this seller ran afoul of the police in a credit card scam. I was able to locate an arrest and a plea deal by the seller over the fraudulent use of legitimate credit card numbers and accounts, but placed on manufactured fraudulent credit cards; she and her brother were making or buying their own.  They then used these cards to purchase legitimate gift cards and then set out to make easy money by selling them on the gift card reselling markets.

woman-arrested

So, apparently, she was buying say a $500 gift card with no cost out of her pocket and so selling it for say $300 or $400 was quick, easy money. Problem is they ran into a clerk in a retail store who got suspicious and contacted the police.  Shortly thereafter police arrived on the scene and discovered the two holding dozens of these ‘fake’ credit cards and thousands of dollars of gift cards; supposedly purchased with these credit cards.

The seller of my gift card certificate was the same woman in the picture and the story.  I was able to take all of this information after speaking to an investigator and confirming with the police and court records and present that to PayPal who immediately ruled in my favor and returned my purchase cost.

Now, I was fortunate in the timing and my diligence.  Otherwise, I am not sure what PayPal’s ultimate resolution to my case would have been.

It is worth noting that Hyatt has had more than its share of problems with gift cards.  Just follow this FlyerTalk thread on the subject. Additionally, Hyatt had thousands of dollars of their gift cards and egift cards pulled from the reseller market this summer. Once where there were thousands in value today there are less than 30 cards/certificates on the reseller’s market.

Now this type of occurrence can happen anywhere with any type of transaction.  In fact, you do not even have to be a willing participant. Take the example of Wells Fargo employees creating fake bank accounts to earn bonuses! Fraud is a major problem in this internet world. René posted an article here on the blog on how credit card thieves were using this same technique to buy iPhones. Of course, this makes a lot of things more difficult for honest folks who are just trying to save money.

iphones-from-stolen-gift-cards-from-portland-tribune

My point is that purchasing certain monetary equivalents on the internet has huge risks and a buyer needs to understand that and have a course of action. Research your seller’s history; check the terms and conditions for refunds and disputes.  Also, and this should go without saying; use your gift cards and certificates very soon after a purchase! Time is not your friend in this arena.

If you play it smart though, you can get some great deals and cut your travel and vacation costs.

Do you have a similar story of a transaction that went wrong?  Do you trust gift cards sold online?  What has been your experience?  Please share your comments and questions below.  –  John  @laptoptravel

 

 

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12 comments

  1. I had 1200 disappear from my Hyatt gift card. Fortunately I was original buyer and Hyatt fixed it. Must have been a big hack as they did not bat an eye and I still had the card securely in my possession

  2. In December 2015 Amazon was selling Carnival Cruise gift cards and I bought one $60 gift card using an American Express offer. This month I gifted it to my niece who was on a Carnival cruise to present to the front desk and she found out the balance was $0. After doing much research on the Internet, I found a few people from Cruise critic that had the same problem. I think the problem was that the gift cards did not have pins attached to them and someone hacked into them using sequential numbers. Amazon said go through Carnival and Carnival was no help. Because I purchased it using American Express, Amex has refunded my $60 but I feel sorry for those who spend more money and didn’t get it back. These were not resells, but from the retailer directly.

  3. Never bought gc directly on ebay except when offered via PayPal but I do buy quite a bit from 3rd party resellers (the likes of cardpool, cardcash,etc) and have had a few cases of drained cards. The resellers have been great on refunding the purchase once notified within their guarantee timeframe. I agree sometimes the risk out weights the savings as too many cons buying with stolen cc and hoping you will use the card right away and the purchase not be detected y the cc owner once they see their statements. I stopped buying large and especially rounded amounts gift cards as they seem to be a guaranteed fraud.

  4. I applaud you and people that have time to find all sorts of ways to save money. However, I don’t have that time so I don’t play these games. Ebay and Craigslist is not what many people think and you have to be very careful when going there. You mentioned you saved 17% but I can only imagine the time you spent to get the $500 back. Not worth my time but again I applaud you for being that diligent.

  5. Bought many $200 Visa/AMEX/MC from office supply stores over the years, all without issue until last year. Bought 4x$200 MC from Staples. Opened them up a few month later, only to find out all had close to 0 value on them. Cards were all drained within a week of activation, and all purchases made were to the same store/website. Luckily, I kept the original receipts and the packaging. Contacted the card issuer, and was able to get all the funds back (however, it did take months and a lot of paperwork).

  6. Scams are everywhere. Not worth the risk to save 20% on a gift card. I would not suggest any doing this.

  7. @SP-

    Your experience underscores my primary advice; use these gift cards & certificates immediately after purchase. As soon as possible.

    That way at least you will know if there is an issue. Time is not a buyer’s friend.

    To everyone sharing their experiences Thank you! Data points really help others.

  8. Someone had unknowingly hacked into my Marriott account and ordered a $500 Marriott certificate with points and a Marriott fraud program emailed me to verify the purchase because it looked “funny”. I think there was some kind of Marriott breach (maybe internal) that had gotten my password..

    When I contacted Marriott’s fraud department it turned out the fraudster had changed my email address in January and Marriott never sent an email change notice to my “old” email address (this is a necessary, common security practice). The fraud investigator who thought the transaction was “funny” manually had gone into my account and saw the email had been changed six months earlier and manually emailed the “old” (my real) email. More investigation found the IP address ordering the certificate was in Japan. I hadn’t noticed anything funny because I hadn’t been using my Marriott account.

    I did get my points back, but the moral of this story is that Marriott has poor security practices and you should regularly check your Marriott account.

  9. I’ve actually experienced a bit different gift card problem (in addition to having a large Hyatt card drained). Over the last two years, I’ve had several gift cards purchased via staples.com and sold by Gift Card Mall that were either not activated or, in one case, reported by gift card mall as stolen. One was an ebay gift card and several Target gift cards.

    In the case of the ebay card, I finally received my funds after three months of waiting.

    The Target e-gift cards (reported as stolen by GCM), however, were a different story. Gift Card Mall took over a month to deliver them. I activated them and a week later went to use them and now the status show the funds drained as “invalid card.” Since I had inquired numerous times about where my cards were, somewhere in that 30 days, they reported them stolen. Unfortunately, GCM refused to accept that they were worthless and held to their misguided belief that my e-cards were fine and that I was a moron, repeatedly telling me they don’t report e-cards as stolen. Each merchant involved, Target, GCM and Staples, all passed the buck, over and over again. Staples said call Target, Target said call GCM, and on and on. No one would speak with the other and every time I called the next merchant, I had to re-tell my story from scratch as notations seems to disappear. And of course promises of calls back were never honored. I was only able to resolve the matter after accumulating 20 pages of notations and over 50 emails and sending it to Chase for a card reversal, and even then in the first round of disputing the charge, Chase sided with Staples. Six months after buying the cards, I finally received my funds.

    Gift Card Mall, owned by Blackhawk Networks, has the WORST customer service ever. So beware when buying cards they sell and always check the balances for activation.

  10. @Pam –

    Another agonizing tale of problems with online purchases of gift cards. Since Blackhawk Networks has taken over so many of the online sellers (including GiftCards.com) ‘common-sense’ resolutions and great customer service have gone in the toilet.

    @Mark R. –

    With so many hands ‘in the cookie jar’ so to speak, many of these large corporations do not have enough security, I agree. Just look at the recent Wells Fargo fraud fiasco to find another reason for concern.

    Thank you both for your comments!

  11. @Nick

    If you read the FlyerTalk thread it’s not just EBay or PayPal; there’s a significant amount of problems with many gift card experiences.

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