Project Red Hook: gift cards as a laundering rail
Homeland Security Investigations runs a dedicated initiative against Chinese organised crime groups exploiting gift cards. Its account is the clearest available: three techniques — tampering cards on shelves, attacking accounts online, and laundering codes bought by scam victims — combining organised retail crime, victim-assisted fraud and trade-based money laundering.
- Year
- 2025
- Where
- United States, China
- Outcome
- Ongoing
- Victims
- Not stated in the sources
- Schemes
- Gift card draining, Government impersonation, Utility shut-off scams
- Last reviewed
- 2026-09-06
The facts, as recorded
- HSI's initiative is called Project Red Hook, targeting Chinese organised crime groups exploiting gift cards for money laundering.
- HSI describes the groups as combining key characteristics of organised retail crime, victim-assisted fraud and trade-based money laundering.
- Technique one, card tampering: criminals manipulate gift card packaging to steal the card information before the card is sold, then place the tampered cards back on store shelves.
- Technique two, online attacks: criminals gain access to online gift card accounts through phishing or hacking.
- Technique three, victim-assisted fraud: scammers impersonate authority figures, trick people into buying cards and sharing the redemption codes, and send those codes to colleagues in the United States to purchase consumer goods, which are then shipped overseas to be re-sold.
- HSI attributes losses in the hundreds of millions of dollars to gift card fraud globally.
- It states the proceeds fund further illicit activity including fentanyl production and smuggling, illegal migration and human trafficking.
- Consumers are advised to examine packaging for torn edges, compromised pull tabs, missing PIN covers or mismatched branding.
Why this case matters
Gift cards appear all over this site as a payment method — the thing a scammer tells a victim to buy. What HSI documents is the layer underneath: the organised infrastructure that turns those codes, and cards that no victim was ever involved with, into goods and money.
And it identifies a technique that has nothing to do with being scammed at all.
The three techniques
Card tampering. Criminals manipulate the packaging of cards on the shelf, steal the card information, and put them back. Nobody has been contacted, deceived or persuaded. The victim is whoever buys that card and loads money onto it — and they will not find out until the recipient tries to spend it.
Online attacks. Access to gift card accounts obtained through phishing or hacking.
Victim-assisted fraud. The familiar one: impersonate an authority figure, get somebody to buy cards and read out the codes. HSI’s addition is what happens next — the codes go to colleagues in the United States who buy consumer goods, which are shipped overseas and re-sold.
Why the third technique explains the first two
Read them together and the business becomes clear. All three produce the same thing: valid gift card balances controlled by the operation, in an American currency, that need converting into money somewhere else.
That conversion is the constant. Goods are bought with the balances, exported, and re-sold. HSI calls this a combination of organised retail crime, victim-assisted fraud and trade-based money laundering — and it is the trade-based part that makes the whole thing work, because a shipment of electronics is far easier to move across a border than the equivalent value in cash.
What it funds
HSI’s statement is direct: the proceeds support further illicit activity including fentanyl production and smuggling, illegal migration and human trafficking.
We record that because it is what the investigating agency says, and it is the reason a gift card rack is treated as a homeland security matter rather than a retail loss-prevention one.
The absence of a number
HSI attributes “losses in the hundreds of millions of dollars” globally, and that is as precise as the public record gets.
Draining in particular is close to unmeasurable. The buyer of a tampered card often does not know the money is gone until much later, may blame the retailer, and frequently reports nothing at all — the loss lands on a gift, at a distance from the person who paid for it.
Sources
- Tackling the Rise in Gift Card Fraud. US Homeland Security Investigations, Immigration and Customs Enforcement. Accessed 2026-09-06. Supports: Project Red Hook, the organised crime attribution, all three techniques and their descriptions, the hundreds of millions in losses, the onward funding of illicit activity, and the consumer advice on packaging.
- Recognizing and Responding to Gift Card Fraud in Retail. US Homeland Security Investigations, Immigration and Customs Enforcement. Accessed 2026-09-06. Supports: The repackaging that makes tampering hard to detect, and the use of drained funds to buy high-value products shipped overseas for resale.