Michigan Moves to Combat Organized Crime Behind Gift Card Scams

The Michigan House of Representatives overwhelmingly approved a bipartisan package of legislation designed to combat a fast-growing type of organized retail crime: gift card fraud. The legislation, co-sponsored by state Rep. Mike Harris and state Rep. Samantha Steckloff, passed the chamber earlier this month with a near-unanimous 103-1 vote and now heads to the Senate for consideration.

Gift cards have long been a popular choice for birthdays, holidays, and other special occasions, but in recent years they have become a prime target for criminal enterprises. Thieves have developed sophisticated techniques to steal card numbers and personal identification numbers (PINs) before the cards are ever purchased, allowing them to drain the funds once the card is activated. Often, unsuspecting consumers only realize they have been victimized when the cardholder attempts to make a purchase and discovers the balance is already gone.

Rep. Harris, a retired police sergeant, emphasized the seriousness of the crime, noting that it goes beyond petty theft. “When someone spends their hard-earned money on a gift card for family or friends, they should be able to expect that the money will be there when their loved one goes to buy something,” Harris said. “This is about holding criminals accountable for preying on innocent people.”

House Bills 4598 and 4599, if signed into law, would formally add gift card fraud to Michigan’s statutes on organized retail crime. Under the new provisions, tampering with or stealing gift cards, or using stolen gift card information with intent to defraud, would be classified as a felony. Offenders could face up to five years in prison and a fine of up to $5,000. Supporters of the bills argue that this change will give law enforcement and prosecutors stronger tools to go after individuals and groups exploiting loopholes in current statutes.

Steckloff pointed out that the scale of the problem is significant, with the Federal Trade Commission (FTC) estimating that gift card fraud accounts for hundreds of millions of dollars in losses nationwide. “Gift card fraud is not a trivial inconvenience – it’s a growing crime wave,” she said. “By the FTC’s account it represents several hundred million dollars stolen from vulnerable citizens’ pockets. By passing these bills, we will without question be making Michigan better and safer by ensuring that consumers, especially seniors and families, have stronger protections.”

She also noted the impact on the retail sector, explaining that fraudulent gift card activity results in financial losses not just for individual consumers but also for businesses. Those losses often end up being passed along to paying customers in the form of higher prices. “The package will also reduce losses to retailers, translating into fewer costs passed on to customers,” Steckloff said. “These bills are common-sense solutions to a growing problem – by passing these bills the House is standing up in a bipartisan way to protect the citizens of Michigan.”

The bipartisan nature of the legislation underscores the shared concern across party lines about protecting consumers and businesses alike from evolving criminal tactics. The near-unanimous vote reflected strong support in the chamber, with only one representative opposing the bills.

Organized crime groups have increasingly targeted gift cards because of their relative anonymity, ease of transfer, and ability to be quickly converted into cash or resold goods. Unlike traditional credit card fraud, where financial institutions can sometimes trace or reverse transactions, gift card theft leaves consumers with little recourse once the funds are stolen. This makes proactive legislative action critical to deterring fraud before it occurs.

Michigan’s efforts also mirror broader national trends, as states and federal regulators look for new ways to curb organized retail crime that exploits gaps in consumer protection laws. The FTC has issued repeated warnings to consumers about gift card scams, including those where scammers pose as government officials or tech support agents and demand payment through gift cards. By expanding organized retail crime statutes to include gift card fraud, Michigan lawmakers aim to address both the technical side of card tampering and the broader issue of criminals leveraging gift cards as tools for fraud.

If the Senate approves the bills and they are signed into law, Michigan will join a growing list of states that have updated their criminal codes to reflect the evolving tactics of organized retail theft. For consumers, the legislation promises stronger protections and the peace of mind that comes from knowing state law enforcement has the tools necessary to pursue and prosecute offenders. For retailers, it represents a step toward reducing a costly and damaging form of theft that cuts into profits and erodes customer trust.

While the legislation cannot eliminate all risks associated with gift cards, Harris and Steckloff say it marks a meaningful step toward closing legal loopholes and sending a clear message to criminal networks that exploiting consumers will not go unpunished. With strong bipartisan support already secured in the House, all eyes now turn to the Senate to see whether the bills continue their swift progress through the legislative process.