State Rep. Mike Harris on Thursday delivered testimony on his bipartisan plan to increase penalties for the growing problem of gift card fraud that harms Michigan customers and businesses.

Harris, R-Waterford, was joined by Rep. Samantha Steckloff, D-Farmington Hills, to share with the House Regulatory Reform Committee how their bills will empower law enforcement to crack down on the criminal networks committing gift card fraud. Sophisticated gift card fraud is often tied to international organizations involved in human trafficking, fentanyl dealing, and other major crimes.

“Gift card fraud is on the rise, as sinister crime rings steal from Michigan shops and shoppers,” said Harris, a retired police sergeant. “They copy gift card numbers and PINs; then once a store activates the card for a customer, the criminals spend the card and profit. Innocent, unsuspecting customers have their gift cards drained of funds before they can ever use them. Many of the organizations responsible for these gift card schemes are involved in more dangerous crimes, too. Our bipartisan plan will increase fines and jail time so prosecutors can get tough on these criminals and protect Michigan customers and local businesses.”

The gift card fraud problem extends beyond simple theft of preactivated gift cards; criminal operations copy gift card numbers and PINs from cards that remain in store for sale. After a card is activated for a customer, the criminals then use the card information to purchase goods, which they then sell for a profit or return to the store for a cash refund.

House Bills 4598 and 4599 would add gift card fraud to Michigan’s law against organized retail crime — a felony punishable by up to five years in prison and a $5,000 fine. The change would allow tougher punishment for anyone who, with the intent to defraud, steals a gift card or gift card number, alters or tampers with a gift card, exploits a gift card purchaser, or obtains anything of value with a stolen gift card or card information.

Retail stores are also ramping up security measures to prevent and detect gift card fraud, and customers can protect themselves by checking gift card packaging for any signs of tampering.

HBs 4598 and 4599 remain under consideration by the committee.