On March 17, Brenda Arvidson of Shakopee got a phone call from her credit card company asking if she was at Party City in Bloomington buying some $300 worth of St. Patrick’s Day items.
She wasn’t; she was driving her daughter to college.
Someone had cloned her card and spent about $3,400 since March 1, primarily by buying gift cards at places like Walgreen’s and Cub Foods in Shakopee.
That’s why Arvidson supported an ordinance passed by the Shakopee City Council last week requiring store employees to ask for a government-issued photo identification when people buy certain gift cards.
It requires customers to show ID before using a credit card (which must match the name on the credit card) to buy third-party gift cards from American Express, MasterCard or Visa, unless they’re paying with cash or a check. So they couldn’t be bought in a self-checkout line. The ordinance would only apply to those three types of gift cards, not those that can only be used at specific businesses, like Applebee’s.
It’s believed to be the first ordinance of its kind in the state, and perhaps nation.
Police Chief Jeff Tate said the ordinance is needed to cut down on fraud cases where people use stolen credit cards to get cash fast by buying gift cards.
“We’ve got so many of them,” he said. When someone steals a credit card either by buying a Social Security number or skimming or stealing a credit card, “one of the first things they do is go make gift card purchases,” he said.
The gift card transactions are largely irreversible, Tate said, and the thieves can then use the gift cards in relative anonymity. Theft rings will often hit several big stores such as Walmart or Walgreen’s in multiple cities, he said.
Fraud is now among the top three crimes in Shakopee, with the city seeing a 17 percent increase in fraud cases last year.
“I hope some day we get to a point where these gift cards are a little more traceable,” Tate said
Tate said an officer told him he rarely finds someone on methamphetamine without a gift card.
“This ordinance was really born out of frustration from staff constantly seeing things kind of cases come through,” he said.
The Minnesota Retailers Association opposed the ordinance, with President Bruce Nustad asking the council to table or reject the ordinance and give retailers more time to work on solutions.
But the department worked on the ordinance for a year, Tate said, and already made some concessions. He originally wanted the ordinance to be much stricter, but he worked with the retail community to address its concerns. For example, some say it will slow down the checkout process or push the problem onto other communities.
Shakopee Mayor Bill Mars said with four major entertainment venues and some 10 million people coming through the city annually to get to them, “that creates opportunity” for crimes “and not all those folks are law-abiding.”
The police department has seen an explosion in fraud, and is “trying to do something about it,” Mars said at the council meeting.
Last week, a Minneapolis man and St. Louis Park woman were charged with identity theft for using cloned credit cards to buy gift cards in Carver and Scott counties from places like Cub Foods and Walgreen’s. Mario Darnell Rodgers, 32, Minneapolis, and Jeri Janine Bierman, 30, St. Louis Park, are charged with fraudulently using the identities of more than eight people to purchase gift cards between March 1 and April 25.
People argue such thefts are a victimless crime, Tate said, because the card owners’ losses are often covered by the card company. But it takes several weeks to address and police invest a lot of time working on the cases.
“So we all pay,” Tate said.
Although her card company covered the losses, Arvidson said she spent many hours on the phone and went through the embarrassment of having her card declined for other transactions.
To buy fireworks or Sudafed, she has to show her ID, and sometimes she’s asked to show it because her card signature is so worn. That doesn’t annoy her, it impresses her, she said.
The ordinance goes into effect on May 18, and Tate said police will monitor the situation to see if it works properly.
Since the ordinance passed, Shakopee officials have been asked for copies of the ordinance by officials in multiple cities. Tate hopes it will be a starting point to larger reform.
“I hope this is just the start of something,” Tate said. “Because the word’s out on gift cards: It’s way too easy.”