Gift card fraud is exploding across Canada — protect your money now before scammers drain your balance in seconds

Gift cards may be a convenient and popular gifting choice, but they’re also a hot target for scammers. According to the Canadian Anti-Fraud Centre (CAFC), Canadians reported losing over $6.8 million to gift card fraud in 2024 (1) — almost double the $3.8 million in reported fraud in 2021 (2). What's worse is that experts believe that despite increasing losses, the reported number actually underrepresents the full extent of the problem.

It's a trend that aligns with a broader surge in retail-related fraud as organized crime groups target vulnerable in-store systems and consumers during busy shopping seasons. In a Toronto Star feature (3), Nunzio Romano detailed his experience of purchasing 20 gift cards, only to discover that seven were empty. "I was shocked," he said. “That’s more than a third of the cards. It’s a substantial loss.”

This form of fraud typically occurs when scammers tamper with cards on retail racks, copying card numbers and covering PINs with fake labels. Once a customer buys and activates the card, the fraudster quickly drains the balance.

How gift card scams work

Scammers have become increasingly sophisticated. As cybersecurity expert Tom Keenan from the University of Calgary explained to CTV News (4): “Bad guys are scooping up a bunch of gift cards, taking them somewhere and putting labels over the barcode. When someone activates the card, they’re ready to go and drain it.”

These altered cards can be difficult for customers to detect in-store. And once the funds are stolen, recovering them is often impossible. While scammers continue to use physical tampering tricks, but newer methods now include:

• Digital balance-checking bots: CAFC reports that fraudsters increasingly deploy automated tools to continually check card activation status and immediately transfer balances (5).
• Social-engineering scams demanding gift cards as payment

In 2023 and 2024, gift cards became the number one payment method requested in fraud scams targeting seniors, according to CAFC (6). Even when customers report fraud, retailers often deny reimbursement, citing that the funds were used or transferred before the issue was reported. Many shoppers find themselves in a bureaucratic tug-of-war with no resolution.

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What retailers are doing about it

Retailers are under pressure to improve security. The Retail Council of Canada is working with law enforcement to implement changes, such as:

• Moving more high-value gift cards into locked cases or behind service counters.
• Introducing tamper-evident packaging for popular card brands.
• Retailers such as Walmart Canada and Shoppers Drug Mart adding enhanced CCTV coverage and activation-delay systems, making it harder for bots to instantly drain balances.
• Major issuers exploring real-time fraud alerts for suspicious activity.

These responses reflect broader efforts initially launched in 2022 with ongoing updates in order to counter more sophisticated digital theft. Still, much of the burden still falls on consumers to recognize red flags and protect their purchases.

Practical tips to protect yourself from gift card scams

Here are proactive steps consumers can take to reduce the risk of falling victim:

• Buy from safe sources: Purchase gift cards directly from the retailer’s website or behind-the-counter displays. In fact, digital e-gift cards purchased directly from retailers remain the safest option.
• Check the packaging: Look for signs of tampering. Look for: Look for: lifted or mismatched stickers, glue residue, bent or torn cardboard and exposed PIN panels.
• Verify balance immediately: Fraud-prevention officers report that most thefts now occur within hours of activation, not days.
• Use cards quickly: The longer a card sits idle, the more time a scammer has to access it.
• Keep your receipt: If something goes wrong, the receipt may help you recover the funds, or at least prove the card was purchased. Even better, keep the receipt, the card serial number and the activation confirmation.
• Register cards online (when possible): Some retailers allow you to register the card to your name, which can provide an additional layer of security.

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What to do if you’ve been scammed

If you suspect you’ve purchased a compromised gift card, act quickly:

1. Contact the retailer where the card was purchased and where it was meant to be used.
2. Report the fraud to the Canadian Anti-Fraud Centre (CAFC) at antifraudcentre-centreantifraude.ca.
3. File a police report. It may be necessary for any follow-up claims or investigations.
4. Alert your credit card company if you used a credit card to purchase the gift card, as some issuers may offer protection.
5. Document everything (photos, timestamps, receipts), as investigations increasingly rely on proof of tampering.

Bottom line

Gift card fraud is rising in Canada, driven by more sophisticated digital tools and ongoing retail-rack tampering. Staying vigilant — and acting quickly when something seems off — remains the strongest defence. With CAFC reporting multi-million-dollar annual losses and growing concerns from retailers and police, Canadians should treat gift card purchases with the same caution as any other financial transaction.

— with files from Romana King

Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

Canadian Anti-Fraud Centre (1); Retail Council of Canada partnering with the Ontario Provincial Police and Canadian Anti-Fraud Centre (2, 5); Toronto Star (3); CTV News (4); RCMP (6)