Governor Katie Hobbs has signed SB 1351 into law, a critical piece of legislation aimed at addressing the concern of gift card fraud in Arizona. Once considered isolated incidents, gift card fraud has evolved into a coordinated operation run by transnational criminal organizations. These networks exploit consumers, retailers, and gift card processors, using stolen redemption information to purchase high-value goods in retail stores before reselling them on secondary and international markets for illicit gain.
The new law, championed by Senator David Gowan in the legislature, criminalizes gift card tampering and ensures consumers retain access to secure and trusted gift card products. It also establishes clear penalties for the unauthorized receipt and use of stolen gift card redemption information, addressing gaps in current state laws that make prosecution difficult. And finally, it ensures law enforcement has the authority to prosecute individuals who deceive victims into providing gift card redemption information under false pretenses.
“I want to thank Governor Hobbs for her support, Senator Gowan for his leadership and the legislators that supported this crucial legislation to combat gift card fraud,” said Michelle Ahlmer of the Arizona Retailer Association. “Gift card fraud has become a serious issue in Arizona, affecting consumers, retailers, and gift card processors alike. This new law equips law enforcement with the necessary tools to prosecute these crimes effectively and helps ensure that gift cards remain a secure and trusted option for consumers. We were blessed to have the support of law enforcement, prosecutors, consumer groups, business organizations and the invaluable support of the Arizona Food Marketing Alliance.”
Gift card fraud and scams take many forms, including tampering with physical cards, tricking victims into purchasing and transferring gift card balances under false pretenses, and stealing redemption information to make unauthorized purchases.
“Arizona is setting a national example in the fight against gift card fraud with this commonsense legislation,” said Senator Gowan. “This law will protect both consumers and businesses while cracking down on criminal networks that prey on unsuspecting victims. I hope this sends a clear message: Arizona is committed to safeguarding its residents and holding these criminal networks accountable.”
Homeland Security Investigations (HSI) and industry leaders have been working together through Project Red Hook, a national initiative launched in January 2024 that has already led to 150 arrests. Data from these investigations increasingly show that criminal enterprises are using gift card fraud to finance illicit operations. Criminals often steal and redeem gift card balances to purchase goods, making it difficult for law enforcement to track and prosecute offenders under previous laws.
Retailers and gift card issuers continue to enhance security measures through technology, employee training, and public education. However, legislation like SB 1351 is essential to disrupt these fraudulent schemes and hold criminals accountable.
