NORWICH - The City of Norwich Police Department (NPD) is warning residents and organizations to be cautious when purchasing gift cards after a recent scam in the Norwich resulted in a $2,500 loss for a local group.

Norwich police investigators said the scheme is known as “gift card draining,”and involves organized criminal networks exploiting a vulnerable gift card system.

Communities across New York State have seen an increase in these type of fraud scams during the holiday season, with thieves stealing legitimate gift cards from businesses, recording the card's information and then returning it to the shelf.

An unsuspecting customer steps into this trap when they take the card to the register to place money on it. The thieves have advanced access to the information and immediate drain any funds placed on the card, often within 24-hours.

Many victim's won't even know they've been robbed until Christmas or later, when they gift the compromised card to another person who then tries to use it.

“So the scheme is called gift card draining,” explained NPD Detective Samuel Stratton. “There’s different methods of doing it.”

In the most recent Norwich case, police said criminals , referred to as “takers,” entered a local retail store and removed several Visa gift cards directly from the shelves.

“So you have a big criminal-like entity at the top of it, right?” said Stratton, “And then they send in a middle person called a taker, going in to the store.”

Police said the local takers stole at least five unactivated gift cards in the current investigation. Because the cards had no value until money was loaded onto them, no alarms were triggered and the cards were not immediately reported missing.

“They don’t set off any alarms,” said Detective Sgt Steven Rounds. “They’re not worth any value until you put the money on.

“They’re preemptively stealing the numbers and repackaging them and then bringing them back and waiting for someone to register them,” added Stratton.

Once an unsuspecting buyer purchases and activates the cards, automated systems monitoring it steal the funds. “They’re using bots and AI to monitor when this card is activated,” said Stratton.”It happens fast.”

“It's the holiday season,” Rounds said, explaining why the scam is appearing now. “Everyone gets gift cards for one another.” Victims may not even realize they’ve been targeted until weeks later.

“If you bought it in November and you’re going to give it to your grandson on December 25th, are you going to continually check the balance in between?” Rounds asked. “You’re not.”

Police also cautioned against checking balances online and on unfamiliar websites. They said there are also many scams that closely replicate legitimate sites. Directing customer to check the numbers online was not a best practice, and would likely cause more harm than good unless buyers were extremely careful about which site they used. Investigators advise avoiding it altogether.

Even more concerning, Rounds said the recently stolen cards in Norwich had additional security measure to prevent tampering they many do not, but they require buyers and sellers to pay close attention to the cards, checking dates and signs of tampering.

He said sometimes there is no way to tell and retailers invest very limited resources in protecting cards that have no value on them yet. “Some stores don't even try to stop the theft of an unactivated card, because to them the card has no value.”

Unlike the recent Visa gift card thefts, which have dates and attempted antitheft packaging to aid in exposing tampering, including seals and scratch off protection, many others are completely exposed.

Though takers will steal some unactivated cards and bring them to another location where they open the packaging or scrap them off to get a PIN number before carefully restoring them and returning them to the shelf, others can be compromised without ever leaving the store.

“In some locations, a taker can pick up the card, peel up a stick, or flips a piece of paper and takes a picture of the information with their phone, folds it back and puts it right back,” he said.

As businesses struggle to deal with the problem under the current set up, Rounds suggested retailers place the cards behind the counter to ensure they are not being tampered with.

Investigators said another safe option was to buy digital gift cards when possible.

It is estimated more than a billion dollars has been stolen from customer across the country and even the Department of Homeland Security is looking into the matter and they suspect the crimes are being orchestrated by organized networks operating overseas.

Many in the commercial industry and in law enforcement are warning the only way to prevent it is by introducing fundamental reform on how gift cards are processed, urging a system closer to how lottery tickets are handled. That would involve moving gift cards away from being directly picked-up by customers, removing the number from the physical cards completely, and generating a code at the time of purchase.

“It has to change,” said Stratton. “I can confirm that in this case, they activated on the 13th, and then on the 14th, the cards are empty. So it is the next day.”

“It’s all on the victim. Whoever has that gift card, it’s their money. It’s not the store’s fault,” Stratton said.

Police said identifying the individuals behind the scheme is extremely difficult, though catching the middlemen “takers” of cards was possible, but also presented challenges since it is difficult to determine when a card was stolen.

“They could have been taken months ago before it was purchased, and then you only find out once the card is used, or given away as a gift,” said Stratton.

He said federal agencies, including the Department of Homeland Security, have issued warnings and are investigating similar cases.

Police said they are working to alert local businesses and raise awareness among residents.

Anyone who believes they may have purchased a compromised gift card or have been victimized by a gift card fraud should contact local law enforcement as soon as possible.

Depending on the specific circumstance, Rounds warned anyone caught taking part in these types of scams could face felony charges.