I purchased 3 $500 Visa gift cards in December last year. Two of the cards had been compromised (i.e. someone else registered and used them) within 24 hours of me purchasing them.
Without disclosing the method, the distributor of the gift cards acknowledged that there are cyber criminals out there that have the wherewithal to know when a Visa/MC gift card has been activated by a retailer (i.e. supermarket, Target, Wal-mart) and can register them without having possession of the physical card. They are then able to encode all the necessary info onto another card for use in a store or online. As inconvenient as it might seem, they recommended that the gift card purchaser register the card themselves (with the name and info of the person you're gifting it to) as soon as possible (i.e. once you get home). Apparently, this is a common occurrence around Xmas with so many gift cards being purchased and mailed with the recipient waiting, perhaps, weeks to register them.
Keep in mind, my situation involved (what I consider to be) high dollar gift cards ($500). May not be worth it to a criminal for $50. But it was a major pain for me as those gift cards were provided to a widow of a co-worker of mine who had passed away from cancer. The money had been collected from other co-workers. It wasn't fun to have to inform her (or my co-workers) what had happened. She was, ultimately, reimbursed. But it was a pain to go through the claims process.
