U.S. Officials Scrutinizing Possible Exploitation of Secondary Market for Gift Cards, Say Sources

By Colby Adams

The rise of online vendors offering to buy bulk gift cards is drawing the attention of investigators who believe the nascent industry may serve as an avenue for money launderers. U.S. officials have previously warned about the misuse of so-called "closed-loop" cards, but focused largely on the potential exploitation of "open-loop" stored value products, such as prepaid ATM cards that allow users to withdrawal money from domestic and international locations. Gift card buyers, by contrast, can ostensibly redeem value only for goods and services. But over a dozen Web sites offer services that could make it easy for criminals to...