Committee advances bill to classify large-scale gift-card tampering as organized retail crime

Senators on the Minnesota Senate Judiciary and Public Safety Committee voted to recommend Senate File 3338 be sent forward after testimony that organized criminal networks are tampering with unloaded gift cards, placing them back on store shelves and then draining value when cards are later activated.

Bruce Newstead, representing Minnesota retailers, told the committee the bill targets “organized, sophisticated criminal activity happening at retail stores across Minnesota,” and said the change would allow prosecutors to treat large-scale schemes differently from ordinary shoplifting. "This bill does not address the type of fraud where a scammer calls someone and convinces them to go buy an iTunes card," Newstead said, distinguishing consumer scams from coordinated tampering.

Detective Josh Percola of the Rapids Police Department described a seven-month investigation that identified a transnational criminal organization, recovered more than 16,000 gift cards being altered for resale and documented losses of more than $350,000 for a single retailer. Percola said the organization used glue and heat tools to remove security strips, recorded card numbers and PINs, then returned compromised cards to store shelves to be purchased and drained later.

Committee members asked brief procedural questions. Senator Lutz moved that the committee recommend SF 3338 to pass and be re-referred to the Senate Committee on Commerce; the motion prevailed by voice vote and the bill was advanced with a technical amendment to its effective date.

The bill places gift-card fraud within the organized retail crime statute enacted in 2023 so law enforcement can pursue enterprise-level theft charges rather than misdemeanor theft tied only to the plastic’s nominal value. Sponsors said the change is intended to focus enforcement on coordinated networks rather than isolated shoplifting incidents.

The next step for SF 3338 is action by the Senate floor; committee counsel explained an effective-date adjustment from 2025 to 2026 was adopted before the measure was sent on.