s gift cards increase in popularity among retailers and consumers, crooks are finding creative ways to use them in fraud schemes.

One way is by skimming cardholder data and transferring it onto a gift card. Once someone has skimmed the information on a credit card, they can move it onto any other card with a magnetic stripe.

Unfortunately, gift cards work well in this type of scam because fraudsters can easily obtain the plastic cards, which also contain a mag-stripe and the fraud is easily hidden.

Last month in Texas, five people were accused of illegally obtaining compromised credit card information and transferring it to the magnetic stripe of Kmart gift cards, KGBT4 in Texas reported. They allegedly used those gift cards to purchase thousands of dollars in gas. Suspicions were raised after cardholders, mostly Citibank customers, complained about the same type of fraudulent transactions.

Criminals are also using stolen credit card information to purchase gift cards from their favorite retailers. Cashiers at a Meijer grocery and retail store in Kentucky, for example, allegedly printed duplicate receipts of legitimate purchases, the "Courier-Journal" reported.

The receipts contained all the magnetic stripe information. They used this data to make more than $3,000 worth of purchases, including many $100 retail gift cards.

As a result of this discovery, a new Meijer store policy is that supervisors must approve when cashiers print a duplicate receipt, and the duplicates now only show truncated account information.

What's a merchant to do? The easiest way for merchants to identify gift cards with cloned data is to compare numbers that come up on the POS screen or the receipt with those on the card.

To prevent these crimes, they should also be aware of how skimming scams work. Card skimming devices are very inconspicuous, usually about the size of a pager.

Cardholders are most vulnerable to skimming when they let their card out of sight, such as to pay for a meal at a restaurant.

For more information on skimming, perform a FastFinder search on this topic on GS Online.