Two Chinese nationals were arrested in American Fork, Utah in connection with a Walmart gift card fraud scheme. According to charges filed by police, the scheme impacted 1,379 transactions between January 16th-23rd. Overall, the fraud impacted more than 200 people across 46 US states. The fraudsters stole over $200,000 before being caught.
Gift card fraud is an increasingly common type of eCommerce fraud. Their popularity with consumers, combined with their anonymous nature, makes them an easy target. Although illiquid, a number of methods exist to turn them into cash.
Here, the state alleges the fraudsters convinced victims to load large sums of money onto Walmart gift cards. The fraudsters then used those gift cards to purchase gift cards for eCommerce services such as iTunes. Finally, they sold those gift cards on marketplaces on the web.
The investigation began when a Walmart loss prevention officer alerted police that a woman purchased $1,600 in gift cards, and noted the license plate of the car she drove away in. Police matched that plate to a similar incident in Oregon a few days earlier.
In interviews with police, suspect Junliang Tang shed light on to the international nature of the fraud. He stated that he received a small percentage to do the in-store purchases required to launder the Walmart gift card cash balances onto iTunes or other types of gift cards. He would then upload the information in digital form, where associates in China would turn them into cash. He received 1%-2% of the balance of the cards as payment.
“He was being paid to buy gift cards at Walmart locations by someone he said he had met online. Tang said he was paid 1% to 2% of the total dollar amount of the gift cards he purchased and uploaded into a digital form for people in China to access,” Tang said in charges filed by the state.
Overall, it is believed more than $600,000 in fraud losses have occurred as a result of this kind of scheme.
Source: https://www.ksl.com/article/46712021/2-charged-in-national-fraud-scheme-involving-walmart-gift-cards