Target Launches Redesigned Gift Cards to Fight Fraud Following New Md. Legislation

A national retailer is rolling out redesigned gift cards to prevent fraud following the passage of an AARP-backed Maryland bill aimed at protecting consumers.

Target announced it is making changes to its gift cards to prevent criminals from tampering with them and draining their value before they are purchased by unsuspecting customers. Scammers were scratching off the film strip on the back to gain the security code needed to access the money on the card, then replacing the strip, making the card appear unaltered.

Consumers who bought the cards - and often gave them as gifts – were unaware the cards were compromised.

The newly designed Target GiftCards CQ have a blank space where the codes once appeared; a Target employee will now add a sticker with a security code at checkout.

"Consumers love gift cards – giving and receiving them. But our latest survey shows that nearly 30 percent of U.S adults have given or received a gift card with no value on it in the last 12 months,” said Kathy Stokes, AARP director of  Fraud Prevention Programs. “Target’s focus on more secure packaging is welcome news, and an important step in protecting consumers."

The move follows the passage of a new Maryland law aimed at reducing gift card fraud. The measure was supported by AARP and signed by Gov. Wes Moore earlier this year. The new law mandates that gift cards sold in stores be encased in secure packaging. Further, sellers must train employees on how to detect gift card fraud - something Target also says it is starting to do. Merchants that sell gift cards online must register them with the state attorney general's Division of Consumer Protection.

Avoid holiday scams and fraud

The Maryland law goes into effect June 1, for "open loop" gift cards, such as Visa and American Express, which can be used anywhere that accepts them. For "closed loop" gift cards, such as those offered by major retailers, the law takes effect Oct. 1. Target has already begun making their gift cards more secure, using hundreds of cybersecurity experts to protect consumers from fraud, the company said in a statement.

Other states have tried to tackle this issue too: A new Delaware state law took effect in September and requires retailers that sell third-party gift cards to display notices alerting consumers to potential scams. New York and Rhode Island have similar laws and other states are considering them.

The FBI is warning shoppers to be wary during the holiday season, when scammers use sophisticated tactics to steal from gift buyers. A recent AARP survey found that 82 percent of adults have encountered some kind of fraudulent activity.

Gift card theft is particularly frustrating for victims, since it's difficult to track down the thieves. The Federal Trade Commission reported that 41,632 incidents of fraud involving gift cards were reported in 2023. The total amount of reported losses was $217 million.

Want to know more about avoiding scams? Check out AARP's FraudWatch Network and sign up for free Watchdog Alerts.