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Committee backs new offense targeted at organized gift-card fraud after industry testimony
Summary
The committee passed a bill creating an offense for possession and tampering with inactive gift cards linked to organized retail fraud after testimony from industry and law enforcement described sophisticated tampering schemes and enforcement challenges.
Representative Gullett presented House Bill 447 (substitute LC 280681S) to address organized retail theft and gift-card fraud. He described a method industry witnesses said criminals use: removing packages of inactive gift cards, extracting the card numbers and PINs in a warehouse, resealing packaging, returning cards to shelves and then draining funds immediately after activation by legitimate purchasers.
Ben Bridal, vice president and senior division counsel for InComm Payments, testified at length about the sophistication of these schemes. He described actors who "unseal the packaging and otherwise tamper with the cards and the packaging, remove all that data, seal the cards back in the packaging, and have other mules go and put them back on the shelves." Bridal said fraudsters then "constantly ping websites to check the balance so that when that gift card is activated, they can immediately drain the funds." He also described industry measures to deter tampering and the limits of those protections.
District Attorney Randy McGinley and other members asked how law enforcement detects and prosecutes the activity before cards are activated; presenters said law-enforcement partners and retail loss-prevention efforts sometimes intercept suspects (for example at traffic stops when large quantities of inactive cards are discovered) but prosecutors asked for clearer statutory tools. The bill's sponsor said the draft sets value for inactive cards and updates the criminal code to reflect package tampering and modern organized-retail methods.
The committee adopted an amendment (AM 281918 with a corrected line-range) that adjusts the struck/inserted language and sets a specified punishment for specified subsections: imprisonment not less than one year and not more than ten years for violations of certain subsections. After amendment, the committee voted to pass the substitute and sent the bill to rules.
Why it matters: Testimony described a growing, sophisticated nationwide problem that affects retailers and consumers; the bill creates clearer criminal liability for possession and tampering with inactive gift cards and upgrades enforcement tools for prosecutors.
Ending note: Committee members said they view the statute as an update to outdated code to account for modern retail-fraud techniques and to give prosecutors clearer charging options.
