alt Hacker NewsHere is how the gift card scam works (in Australia)
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Yes they do still get activated at the checkout. But when you go to redeem, the code is missing the last digit or two so it doesn't work. People take the unactivated gift card, tamper with it to get inside carefully so it's not detectable, scratch and get the code, remove the last digit or two, replace the scratch off layer, put the unactivated gift card back on the shelf. Then after you activate the gift card at the checkout, they redeem it.
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From this discussion
This is why Target doesn't have the activation code on their gift cards anymore, you have to have it added with a sticker when it is being activated now, and then scratch it off.