2 From NY Charged In Gift Card Tampering Scheme In South Kingstown

SOUTH KINGSTOWN, RI — Two New York men were arrested last week after South Kingstown police said they were caught tampering with thousands of gift cards, including more than 900 from a local CVS.

Quanbin Huang, 45 and Zhixiong Lu, 46, both of, Middletown, New York, were charged with forgery and counterfeiting, conspiracy, and obtaining property by false pretenses.

"Organized retail crime has become a pervasive problem," Police Chief Matthew Moynihan, Chief said. "This is the second time this international crime organization has been caught in Rhode Island in just over a month, and people need to be aware that there are likely thousands of other fraudulent or tampered gift cards being circulated in our stores."

Police said the arrests came after an incident at the CVS on Main Street. An employee confronted a saw a man trying to add gift cards to a store display and confronted him. After confronting him, the man left the store and left in a vehicle, but police said the store employee got his license plate number.

Officers later found the vehicle on Route 1 northbound as it was entering North Kingstown. Police said they pulled Huang and Lu over and detained them.

Officers searched their vehicle and found three boxes containing 1,848 suspected tampered gift cards, according to police. Police said they also seized 935 gift cards from CVS, which were also believed to be tampered with.

Moynihan said the scam, known as gift card draining, has been documented across the U.S. The scam can work one of two ways. Either a fraudulent barcode is attached to an unsold gift card or a scammer steals the details off a legitimate gift card and puts it back on the store rack. Either way, once the card is activated by a legitimate purchase, the value is drained by the criminal.

"The alert CVS employee and the great work by members of the South Kingstown Police Department allowed for these two fraudsters to be identified and possibly prevented nearly 2,000 unsuspected consumers from becoming victimized," Moynihan said. "If the recovered tampered gift cards were returned into circulation, the potential total fraud amount from these two individuals could have been just under $1 million."

"There are likely many more fraudulent gift cards in Rhode Island right now," Moynihan added. "Consumers can protect themselves from this scam by purchasing online gift cards if needed. If you do purchase a physical card, buy one near the register or behind the counter in a store. These are sophisticated criminal operations, and the tampered cards are nearly indistinguishable from legitimate ones."

This incident remains under investigation by the South Kingstown Police Department and the U.S. Department of Homeland Security. Anyone with information is asked to call Lt. Craig Young at 401-783-3321, extension 314.

Huang and Lu were arraigned Thursday in Washington County District Court and were released on $10,000 surety bail. Police said they are both Chinese nationals who are also facing immigration charges stemming from their illegal entry into the U.S. in 2023 through the southern border.

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