Costco Digital Gift Card Fraud: Customers Report Drained Funds, Reimbursement Battles

Costco customers have reported their digital gift cards being drained of all funds, with some suspecting fraud. The retailer has not provided details on the issue, but experts believe gift card fraud could be the cause. Customers are seeking reimbursement, but the outcome is uncertain.

Costco customers have reported their digital gift cards being drained of all funds, with some suspecting fraud. The retailer has not provided details on the issue, but experts believe gift card fraud could be the cause. Customers are seeking reimbursement, but the outcome is uncertain.

Numerous Costco customers have taken to social media and online forums to express their frustration with the disappearing balances on their digital gift cards, known as Shop cards. Complaints range from the cards arriving with a $0 balance to wait times for physical cards exceeding a few weeks. The most significant issue reported is the "disappearing balance" problem, where funds on the cards simply vanish without explanation [1].

Shelly Xu, a Costco customer from Perth, Ont., discovered roughly $200 missing from her Shop card in late June. She has spent hours trying to resolve the issue but remains in limbo, with Costco providing little guidance or information [2]. Xu is not alone; dozens of other customers have reported similar incidents, with some even receiving refunds while others are still waiting for a resolution.

Daniel Tsai, a law and business professor at University Canada West in Vancouver, criticizes Costco's handling of the situation. "Costco has a duty to the public as customers to ensure that they're aware of any compromise of their gift cards," he said. "From a business perspective, this is a real marketing fail because you're going to have customers lose trust in the brand" [2].

Costco has temporarily suspended online sales of digital Shop cards but has not provided a clear explanation for the issue. The retailer has not responded to repeated requests for comment, leaving customers and experts alike in the dark about the cause and extent of the problem.

The gift card industry is booming, but so is related fraud and organized crime. In 2021, Canadians reported $3.8 million in losses due to gift card scams [2]. Federal rules mandate reimbursement in many cases of credit and debit card fraud, but gift card fraud victims often face a more challenging path to recovery.

As the holiday season approaches, customers are advised to be cautious when using digital gift cards and to be vigilant for any unusual activity. Costco customers are encouraged to monitor their accounts closely and to report any suspicious activity to the retailer and relevant authorities.

References:
[1] https://www.thestreet.com/retail/costco-members-report-multiple-major-gift-card-problems
[2] https://www.cbc.ca/lite/story/1.7601882