Key takeaways
- Maryland's "Gift Card Scams Prevention Act," approved in May 2024, targets gift card draining scams and is the first law of its kind in the U.S.
- The law, effective June 2025, mandates secure packaging and visible warnings to prevent gift card tampering, with some exceptions for chip-enabled cards.
- Companies must maintain detailed transaction records for at least three years, subject to law enforcement inspections.
On May 9, 2024, Maryland’s governor, Wes Moore, approved the “Gift Card Scams Prevention Act,” which is the first law in the nation aimed at targeting the widespread scam known as “gift card draining.” Maryland’s law comes as no surprise to federal authorities, who, for at least the past 18 months, have actively investigated the role of Chinese organized crime. The U.S. Department of Homeland Security launched a task force, known as “Project Red Hook,” to investigate this scam, leading to about 100 arrests, of whom 80 to 90 are Chinese nationals or Chinese Americans. In carrying out these scams, a “runner” steals gift cards, obtains the card numbers and drains the balance, before returning the worthless card to store shelves for later purchase by unsuspecting consumers. A single “runner” – driving from store to store – can swipe thousands of cards or return them after tampering in a very short time.
Generally effective on June 1, 2025, the Maryland law will likely inspire nationwide packaging changes. For in-person sales, the gift card’s packaging must conceal or cover all numeric codes (e.g., card number, PIN, barcodes) necessary for redemption, ensuring they are not easily removed or tampered with. Combined with this requirement, the packaging must include a warning label (i.e., “Do not sell or purchase if packaging has been broken or indicates tampering”) for sellers and consumers alike.