CHARLESTON, W.Va. — Although a bill which would have outlawed selling gift cards at a pawn shop is done, the activity it aimed to prevent is by no means over. Barboursville Police Chief Mike Coffee spoke to lawmakers early in the session about the scam which is costing retailers in his area hundreds of thousands of dollars.
Thieves are shoplifting merchandise from a store. The merchandises is passed off to a partner in the parking lot who takes the goods back inside to the stores return counter wishing to return the items for refund. Since the person has no receipt store credit is given to them on a gift card instead of cash. The gift cards can be sold for half their value at area pawn shops and the pawn shop owner can sell the cards to a broker for 80 percent of the card’s value.
Coffee said he thought lawmakers possibly didn’t understand how prevalent the scheme has become.
“Most of them are lawyers and good working type people,” said Coffee. “I don’t think they spend much time in pawn shops or even realize what the problem is.”
Lawmakers questioned Coffee about the practice which has become a favorite way for drug addicts to make quick cash. Coffee said he thinks lawmakers were overly concerned about people who use gift cards properly, but realized they needed cash more than the gift. He said that’s not what’s happening in this scheme.
“When we’re seeing two and three thousand dollars at a time that people are trading gift cards for cash at a pawn shop,” said Coffee. “That’s not something Grandma sent them for Christmas.”
Coffee said unfortunately it’s impossible to detect when the scheme is in progress.
“The crime was shoplifting and when it occurred the store didn’t get anything out of those items,” he said. “The committee thought these cards were paid for, but that’s not the case. It’s stolen property and a crime successfully committed.”
Coffee said Macy’s in the Huntington Mall lost $300,000 last year to shoplifting. It’s unknown how much of that was tied to this scheme, but a lot of it was for sure. Coffee said stopping the sale of gift cards to pawn shops won’t stop the crime completely, but it will break up the way the criminals currently conduct business and would have an impact.
“You can sell these things on the internet, but you have to wait for a check to be cut and these things to be checked and make sure they’re active. There’s a time line involved,” Coffee said. “Most of the time drug addicts are interested in immediate cash. That’s why they’re doing these things.”
Coffee said he plans to try to push the legislation again next year in Charleston.