New for subscribers! Gift this article to friends and family for free.
If you received a prepaid gift card over the holidays, you might need to check if it’s worth what it says.
It’s a common scheme that end-of-year, gift-buying consumers fall victim to as scammers install phoney prepaid gift cards on shelves, or find a way to hack and reverse-engineer the algorithm on the barcode to find which cards have money.
This past week, a video went viral on social media of a Shoppers Drug Mart customer in Vancouver who purchased a gift card for a family to buy food for Christmas and it ended up being a fake.
ARTICLE CONTINUES BELOW
“Unfortunately, gift card fraud is an issue impacting the retail sector as a whole. Our store teams are trained to recognize tampering and other fraudulent situations involving gift cards, doing their best to intercept suspicious transactions before purchase,” wrote Loblaw, the parent company of Shopper’s Drug Mart, in a statement to the Star.
The customer has since been refunded, but the problem isn’t going away. Across the border, American shoppers are expected to spend almost $30 billon on gift cards this holiday season, according to the National Retail Federation.
Daniel Tsai, a lawyer and professor at the University of Toronto and the founder of ConsumerRights.ca, is calling on retail stores to do a better job of protecting consumers from this scam and is urging customers to consider not buying them at all.
“Go to your local farmer’s market, buy something local that’s unique,” said Tsai. “It’ll help the local business out, help the Canadian economy without having to support these big corporate chains that don’t care about the consumers.”
How do scammers do it?
In most instances, Tsai says scammers can lift the barcode from a gift card while it’s still on the shelf and use it to extract the card’s money.
When the consumer purchases the card, the card is emptied. They will also reverse-engineer the algorithm on the barcode to figure out which card has money.
ARTICLE CONTINUES BELOW ARTICLE CONTINUES BELOW
“There’s no foolproof system,” said Tsai. “It just indicates the reality of how it’s a wild west when it comes to what scammers will do. They have no morals, they don’t care who they hurt and how they steal, so we just have to be that much more vigilant.”
What can retailers do?
Tsai says retailers can change the way they issue the cards so that it’s electronic-based, tamper-proof and secured by blockchain digital ledger so that it’s encrypted.
Another fix could be keeping gift cards behind store counters and making them inaccessible, instead of in an open display.
But that not having gift cards visible on the retail floor also puts them out of the sight of consumers, and less convenient for buyers to select and immediately purchase without the assistance of a store worker.
“Same thing as tobacco, keep it behind the counter because you want to make it safe and secure so not anyone can just take it and buy it and, in this case, scam it,” said Tsai.
How can buyers avoid being scammed?
Sadly, Tsai says it’s almost impossible for consumers to truly spot fake prepaid gift cards or know if they’ve been tampered with.
ARTICLE CONTINUES BELOW ARTICLE CONTINUES BELOW
In most instances, he recommends people who receive a gift card use it as soon as possible to find out if it’s valid. If the card isn’t, take it back to the store and speak to the retail manager in hopes they will refund you.
There’s no guarantee the store will provide a refund since there are currently no laws or policies in Canada to protect consumers, according to Tsai.
It’s an issue that Tsai says consumers should be raising with their local government officials, to push for better consumer protection laws.
“I think it’s worth for the law to change to provide protections for consumers if they buy a gift card that turns out to be scammed, have a right of refund and that would make retailers more cautious and definitely increases the security surrounding their gift card. But I don’t think we’re there yet,” said Tsai.
“Eventually some province, maybe Ontario or some other province will step up and do something.”
If the prepaid gift card was purchased on a credit card, Tsai says you can reach out to the credit card company, let them know the funds on the card never existed and try to get them to reverse the charge so you get your money back.
ARTICLE CONTINUES BELOW ARTICLE CONTINUES BELOW
Tsai also suggests a return to giving cash, or something more personal, instead of purchasing gift cards.
“I think instead of gift cards, maybe people should go back to the hard work of trying to figure out what gifts they want to get their friend or family member,” said Tsai.
“Gift cards are the artificial intelligence cheat for gift giving. Maybe we should go back to the old ways of thinking of a thoughtful gift and buying it for someone we care about.”
Update — Dec. 27, 2025:
This story has been updated since its publication.
ONTARIO NOW NEWSLETTER Get our free new weekly newsletter
Error! Sorry, there was an error processing your request.
There was a problem with the recaptcha. Please try again.
Please enter a valid email address. Sign Up This newsletter is only available for subscribers. If you are already a subscriber, please login now. If you want to become subscriber, please click here Yes, I’d also like to receive customized content suggestions and promotional messages from thespec.com.
You may unsubscribe at any time. By signing up, you agree to our terms of use and privacy policy. This site is protected by reCAPTCHA and the Google privacy policy and terms of service apply.
ONTARIO NOW NEWSLETTER You’re signed up! You’ll start getting Ontario Now in your inbox soon.
Want more of the latest from us? Sign up for more at our newsletter page.
