Michigan has signed laws targeting a form of gift-card fraud in which thieves drain a card’s balance after a shopper buys and activates it. WEMU-FM reported the enactment of House Bills 4598 and 4599 on October 6, 2026. Despite the phrase “credit card” in the original headline, the story concerns gift cards and Michigan’s organized retail crime law—not a change to ordinary credit-card fraud rules. WEMU-FM’s report says the laws provide maximum penalties of five years in prison, a $5,000 fine, and restitution.
How the gift-card balance-draining scam works
The scheme described by WEMU and Michigan Attorney General Dana Nessel’s office begins before a gift card is sold. A thief takes an unsold card, copies or exposes its unique redemption information, then conceals the tampering and returns it to the store display. After a shopper buys and activates the card, the thief monitors it and transfers the balance before the recipient can redeem it.
The Attorney General’s account concerns an alleged scheme under investigation in 2026; the allegations are not proof of guilt. The key vulnerability in this method is the exposure of redemption details before purchase, not the use of a credit card to pay. The Attorney General’s March 2026 account, as reported by WEMU, describes the alleged method.
What Michigan’s new laws change
Michigan House Bills 4598 and 4599 were introduced to amend the state’s Organized Retail Crime Act. In 2025, the Michigan Attorney General described their policy purpose as bringing certain gift-card fraud conduct under that act. WEMU reported that the bills were signed into law in October 2026, giving prosecutors an organized-retail-crime route for covered conduct.
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Before this change, Michigan officials had charged alleged gift-card drainers under other statutes, including conducting a criminal enterprise and possession of a fraudulent financial transaction device. The new classification places the conduct within the framework used to investigate and prosecute organized retail crime. Drew Beardslee, vice president of governmental affairs at the Michigan Retailers Association, said it made sense to use that framework because Michigan has a unit dedicated to investigating and prosecuting organized retail crime. The Attorney General’s 2025 release describes the bills’ original intent; it does not establish the final enacted wording.
Reported penalties—and what they do not mean
WEMU reports maximum punishments of five years in prison, a $5,000 fine, and restitution. These are reported statutory maximums, not an automatic sentence or a description of the outcome in any particular case. A sentence depends on the case and applicable law.
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The sources available for this account do not confirm the final public-act numbers or effective dates. The introduced bill text and earlier bill history should not be treated as a substitute for the enrolled statutes. Michigan’s HB 4599 bill record contains introduced text and early history, but does not establish those final details.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Why the law matters to gift-card buyers
The Michigan Attorney General’s 2025 release reported more than $228 million in U.S. losses to gift-card scams in 2023, citing Federal Trade Commission data. The Attorney General cautioned that actual losses may be higher because scams are underreported. This is the state’s reported figure, not an independently verified direct FTC statistic.
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The law addresses how certain gift-card fraud can be prosecuted; it does not guarantee that every tampered card will be detected before purchase or that a recipient will recover a stolen balance. For consumers, the practical issue remains whether redemption information on a card has been exposed before it is bought.
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