How it works Thieves look for gift cards that are displayed on grab-and-go racks, such as in grocery and department stores. They use a handheld scanner—which you can buy online for just a few hundred dollars—to read the code behind the magnetic or scratch-off strip on the back of the card. That, combined with the card number on the front, gives them everything they need to steal the value of the card. Then they put the card back on the rack. Later an unsuspecting buyer purchases the worthless gift card. Even if a card isn't preloaded, a thief can steal the card number and security code, then call the 800 number shown on the card every few days to check the balance. Once a shopper has purchased the card and loaded it with a dollar amount, the thief can spend it before the purchaser does.
Prevent it Buy cards that are behind a customer-service desk... Inspect the card; if the magnetic or peel-off strip on the back isn't pristine, the card might have been tampered with. When buying a preloaded card, ask the cashier to scan it to make sure the full value is on it. If you're buying from a third-party gift-card site, look at the refund policy. And always hang on to the receipts. If something goes wrong, it can help you—or the gift recipient—get a refund.
From Yahoo! Shopping, which has additional tips.