The gift card tampering scam costing shoppers thousands

An ABC investigation has discovered tampered gift cards are being sold by Australia's biggest supermarkets, with charges even being laid over the issue.It is leaving shoppers confused and stressed, and raising questions about whether this is linked to a multi-billion-dollar criminal scam.The packaging felt "kind of funny" in Lavkesh Arora's fingers.The Melbourne tech worker had gone into Coles that day eager to buy Apple gift cards, lured by a supermarket promotion that gives people extra FlyBuys points when they purchase them. Lavkesh Arora bought several Apple gift cards with signs of tampering.(ABC News)"I wanted to buy an Apple laptop," he explains."Cost of living pressure, there was a good promotion on."I thought the packaging is good enough, and I shouldn't have to worry."Once home, Lavkesh tore open the perforated cardboard packaging on his five Apple gift cards, which were worth a total of $2,000.With the plastic cards inside revealed, he saw one worth $200 and another valued at $500, both had missing digits and redemption codes."They were completely scratched out," he says. Two cards, worth $700, that Lavkesh Arora bought had missing digits and redemption codes.(ABC News: Rudy De Santis) Gift cards bought by Lavkesh Arora in Melbourne.(ABC News: Rudy De Santis) Lavkesh Arora could not redeem his gift cards without the codes.(ABC News: Rudy De Santis)Without these crucial codes, Lavkesh could not proceed onto Apple's website and redeem his gift cards.That knowledge sent him into a panic, wondering if he had been scammed and just thrown $700 down the drain."I was anxious and stressed," he says."I have my ears and eyes open for scams, so I was surprised." Georgia Perry's four "scratched" Apple gift cards worth $2,000.(Supplied: Georgia Perry)Lavkesh's experience is not isolated.Four days after he had bought those Apple cards at a Coles in Melbourne's eastern suburbs, a woman had the same experience at a Coles about 40km away.Georgia Perry's story of unknowingly buying not one but four Apple gift cards worth $2,000 with "weird scratching" went viral online."They're all f****** fraudulent," she said in an incredulous social media video.Georgia told her story to ABC News at the time this happened to her in May, and it is after this that people contacted the broadcaster with similar claims.Reports came in from around the country, with the ABC inspecting customers' receipts, gift card photos, and correspondence with companies like Coles, Apple and Australia's gift card distributors.One person even sent in a video of themselves opening suspicious packaging to reveal a tampered card inside.The earliest reports of a suspect gift card date back to 2024. Georgia Perry's story about buying four Apple gift cards with "weird scratching" went viral online.(ABC News: Eric Hao Zheng) Two shoppers, one in Perth and one in Sydney, reported suspect cards in 2024. (ABC News: Eric Hao Zheng)In 2024, both a Coles customer in Perth and a Woolworths shopper in Sydney report having a suspect card. In 2025, there were more reports of suspect cards.(ABC News: Eric Hao Zheng)There are more reports during 2025 from puzzled gift card shoppers at Australia's two biggest supermarkets. There were further reports of suspect cards in 2026.(ABC News: Eric Hao Zheng)And more again this year, with people buying gift cards they couldn't redeem in regional Queensland and Victoria. ABC News received reports of tampered or strange cards from Melbourne shoppers in mid-2026.(ABC News: Eric Hao Zheng)Zooming into Melbourne this year, there was a spate of reports to ABC News of tampered or strange cards from shoppers in May and June.This includes those "scratched" Apple cards purchased on opposite sides of the city at Coles supermarkets by Georgia Perry and Lavkesh Arora.And on the very same day as Georgia Perry, a shopper at Coles' main rival Woolworths also got a suspicious $100 Apple card in the city's eastern suburbs."I got home, opened the card and the number was scratched off underneath the opening," Damian Toohey tells ABC News."I was really frustrated."Customers start to unpack the scamMany people who reported gift card issues to the ABC also experienced frustrating communications with companies involved, with emails raising more questions than answers.Take Sarah Le Page, who was given a $200 Apple gift card by her husband in September 2025.The Melbourne-based teacher opened it a few days later and discovered the same "missing digits" on the plastic card as Lavkesh Arora and Georgia Perry. A gift card Sarah Le Page received as a birthday present turned out to have already been redeemed.(ABC News)She went to both Apple and Coles, and ended up in a frustrating back and forth about getting a refund."This is awful. It was a birthday present. I am not happy," she wrote to an Apple chat representative.After they submitted extra card data, this chat with Apple led to another curious discovery."The gift card is already redeemed," Apple wrote.So what is happening?Of the 19 reports of strange gift cards the ABC documented, many were on Apple cards that can be redeemed for the tech giant's electronics.In an indication of a cat-and-mouse game happening behind the scenes, Apple changed its gift card packaging in Australia in early 2025.The updated rectangular housing has perforation around the edges that will show signs of tearing. The new and old Apple gift card designs.(ABC News: Eric Hao Zheng)"Do not sell or buy if package has been tampered with or opened," the new era packaging says in red writing.So is it possible to get past the safeguards of one of the world's biggest companies? What about credit card companies selling gift cards too?We asked Adam Parks, who used to be the Australian representative for the US Department of Homeland Security's investigative unit. Adam Parks now heads up a US taskforce that investigates gift card fraud.(Supplied: Adam Parks) Adam Parks says there were reports of gift card tampering at all top 20 retailers in the US.(Supplied: Adam Parks) Adam Parks says a network of people is behind the gift card tampering in the US.(Supplied: Adam Parks)Today, he is back in the United States and heads up a Homeland Security taskforce specifically dedicated to investigating gift card fraud.Project Red Hook was set up in 2024 because there were such widespread reports of tampering."All of America's top 20 retailers were being affected," Adam tells ABC News.In the US, Project Red Hook has found the tampering is happening through a network of people with different roles."The only thing that really makes it profitable is to be able to do it at scale," Adam explains.Adam says the most common method involves people physically going into stores and taking stacks of gift cards.In the industry, it is dubbed "card draining". An illustration of a stolen gift card being opened with a razor.(ABC News: Eric Hao Zheng)After taking gift cards off shelves, people carefully open the packaging, such as with a razor blade or even by using hair dryers to unstick glue. The information on the gift cards is recorded.(ABC News: Eric Hao Zheng)The information on the cards that is needed to eventually use the funds is then recorded.Those details can sometimes be "scratched" off. The gift cards are then returned to the shop.(ABC News: Eric Hao Zheng)The cards are then packaged back up."After [taking] card 100, you're probably getting pretty good at taking those apart and putting them back together again," Adam Parks says. Gift cards are activated by retailers.(ABC News: Eric Hao Zheng)The tampered gift cards are then returned to the shop floor, waiting for unsuspecting shoppers to buy them.They are only "activated" for redemption when they are actually paid for. Gift cards are purchased by consumers.(ABC News: Eric Hao Zheng)Adam says there is a "whole infrastructure" that goes on in the syndicate's back-end, where people check balances of cards on the codes they stole and whether they have been activated. Consumers realise gift cards are tampered with.(ABC News: Eric Hao Zheng)Given gift cards are often given as presents, it could be weeks or months before somebody opens them only to discover issues."The acquirers [then] spend it before the consumer can spend it," Adam says.Adam Parkes said it can be lucrative for those operating the scam en masse, with "tens of thousands of victims and billions of dollars" drained.Besides the obvious inconvenience to consumers, Adam says the real concern is about what activities this "draining" is funding.In the US, regulators have run busts on warehouses full of electronics and other high-value goods bought with the proceeds of gift card fraud.They have linked that back to organised Chinese syndicates, funnelling money back to that country. US regulators have found warehouses with electronics and other goods bought with the proceeds of gift-card fraud.(Supplied: Homeland Security)In two years, they have arrested 250 people, linking the issue to human trafficking, money laundering, even murder. They have identified cases abroad in Canada through to parts of Europe."It's really a global phenomenon," Adam says."We've obviously seen it in Australia, New Zealand, Singapore."We also know that this is tied to the South-East Asian scam compounds down in Myanmar, Laos and Cambodia."Coles busts gift tamperer instoreABC News can reveal that last year, Coles worked with police to bust a member of an alleged criminal syndicate that was tampering with gift cards in supermarkets in New South Wales.Court documents show a man was arrested for placing tampered Apple Gift cards on the shelves of at least five different Coles stores in Sydney.Police alleged the man did this with at least $10,200 worth of gift cards, and suspect he was also doing this in Goulburn and the Southern Highlands.He was sentenced to a two-year community corrections order and a 15-month suspended sentence. A statement from Coles.(ABC News: Eric Hao Zheng)The supermarket's biggest rival also acknowledged the issue. A statement from Woolworths.(ABC News: Eric Hao Zheng)Gift card scams falling through cracksIt is unclear how much further this crime has spread, or if any authority is collecting wider information.The Australian Federal Police and the money laundering organisation Austrac both said gift card fraud is not their domain, while the authority that handles complaints about financial products has limited scope over gift cards.That is because the Australian Financial Complaints Authority (AFCA) only has jurisdiction over gift cards issued by companies with a financial licence, like Mastercard or Visa. Companies like Apple, Coles and Woolworths do not fall under its remit.Australian private investigator Ken Gamble took a look at the ABC's investigation. Ken Gamble points to a spate of gift-card-tampering reports on a map of Australia.(ABC News: Fletcher Yeung)He said the reports of tampering occurring mostly around capital cities indicated it could be organised crime."It's definitely theft, but it would be one law enforcement would give a very low priority to because of the monetary value," he says. Ken Gamble says gift-card tampering has the potential to become prolific in Australia.(ABC News: Fletcher Yeung)"Unless they join all the dots here and they can see that this is done in great volume, [then] you're not going to get law enforcement to put the resources in."And that's the problem. That's why this type of crime is potentially something that could become very prolific in Australia."What is the industry doing?Coles and Woolworths both defended the measures they are taking to stop gift card tampering, including reporting suspicious activity to authorities and adopting in-store tactics to thwart scammers. Coles says it takes the issue extremely seriously.(ABC News) Woolworths says it is trialling "anti-tamper" hangers for gift cards.(ABC News)Woolworths, for instance, is trialling "anti-tamper" hangers for gift cards. It even has manned stations next to their colourful hanging racks in some supermarkets."Coles takes the issue extremely seriously," that supermarket said."We know that there is no single measure that will eliminate gift card fraud, and this isn't an issue that can be solved by retailers alone, it requires cooperation across retailers, gift card providers and law enforcement."The ABC found it more difficult to get information out of other parts of the gift card supply chain.Apple would not disclose who is responsible for producing its packaging; however, it defended its safeguard mechanisms.Beyond recognisable brand names, there is an entire global industry that helps manufacture and distribute gift cards on behalf of other companies. In Australia, the two biggest are Blackhawk and InComm.InComm, for instance, manages "His" and "Her" branded gift cards sold in Australian supermarkets that give people credit to shop at retailers like Sportsgirl or Kookai. A global industry helps manufacture and distribute gift cards on behalf of other companies.(ABC News) Apple has defended its safeguard mechanisms.(ABC News)The ABC has seen correspondence between stressed customers and the gift card issuers.For instance, this year a woman secured a $250 replacement gift card from InComm, after a back-and-forth exchange with the company about a Visa "For You" that had clear scratching. A Visa gift card with numbers scratched out.(ABC News: Eric Hao Zheng)"InComm Payments understands that fraud is an upsetting and stressful experience for consumers," the company said, while defending its packaging and technology.Blackhawk referred the ABC to the industry association. The Australian Gift and Prepaid Card Association (AGPCA) declined an interview but defended the industry, which it recently estimated is worth almost $21 billion in Australia."Gift cards remain a trusted, widely used product, and industry participants continually enhance controls, monitoring and consumer awareness initiatives to protect customers and maintain confidence in the market," its president, David Christie said.David Anderson, who runs an Australian fintech pushing digital gift card technology, believes the industry needs to move beyond using gift cards with physical codes on them. David Anderson says gift cards with physical codes use old-school technology.(ABC News: Fletcher Yeung) David Anderson says the issue of card draining is well known.(ABC News: Fletcher Yeung)"This [is] old school technology," he says."I think it's quite well known that card draining happens."Consumers still battling the industryThe biggest losers are consumers.Many of the more than a dozen people that ABC News spoke to for this investigation described a frustrating and sometimes ad-hoc process to get refunds. Some never got them and gave up.After discovering his scratched cards, Lavkesh Arora went straight back to his local Coles with his receipts and tampered evidence. He was told to go to Apple."That was a little surprising for me because the signs of tampering were visible," he says. Lavkesh Arora received a $700 credit from Apple. (ABC News: Rudy De Santis)Apple eventually gave him a $700 credit.Georgia Perry did get a refund from her local Coles, after a back and forth with the supermarket's customer care team as her story was going viral in May."My blood still boils every time I get ads for the Coles and Woolies gift cards," she says today.Meanwhile, Sarah Le Page ended up doing a charge-back with her credit card company, which she received just as Apple was notifying her that she was also eligible for $200 credit."I find it hard to understand why it just keeps happening," she says."This needs to be shown to as many people as possible to stop the victim-blaming that is common."They need to put themselves in the place of someone receiving a gift and understand the frustration."