Michigan Strengthens Laws to Combat Gift Card Fraud
In a bid to tackle the growing issue of gift card fraud, Michigan has introduced new legislation that classifies this type of fraud as organized retail crime. This change aims to provide law enforcement with a more robust framework to prosecute offenders involved in gift card scams.
Gift card fraud typically occurs when individuals tamper with a card, steal its redemption information, and return it to the store shelf. When an unsuspecting customer purchases and activates the card, the fraudsters can access and deplete the card’s balance before it is used by the buyer.
The newly enacted state laws now categorize such fraud as a felony under organized retail crime. This legislative change is backed by the Michigan Retailers Association, whose vice president of governmental affairs, Drew Beardslee, emphasized the logical step of aligning gift card fraud with organized retail crime statutes.
“By putting it under the umbrella of organized retail crime, especially when, in Michigan, we’ve got a unit that is solely dedicated to investigating and prosecuting organized retail crime, it just made sense to put it all under the same statutory framework,” Beardslee stated.
Previously, Michigan authorities relied on other legal provisions to prosecute cases of gift card fraud. For instance, earlier this year, the Michigan Attorney General’s office charged a California man with operating a criminal enterprise along with possession of a fraudulent financial transaction device. These charges could result in a maximum 20-year prison sentence for the former and a four-year sentence for the latter.
The new legislation, however, imposes penalties of up to five years in prison, a $5,000 fine, and potential restitutions. This legislative update comes as both state and federal bodies increase their focus on combating gift card fraud, which is responsible for over $200 million in annual losses, as highlighted in Federal Trade Commission reports.
Beardslee noted that gift card fraud often goes unreported, as many victims assume they have purchased a faulty card or do not deem it worthwhile to pursue the issue for smaller amounts. “A lot of times they assume they just got a dud, or it goes unreported and it’s maybe the value they put on it was just not so much they wanted to go back and redeem it. It’s hard to quantify exactly how much it is but it’s certainly something that’s been seen all over the country,” he explained.
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