Four people have been arrested in connection with an organized gift card tampering operation that investigators say placed hundreds of compromised cards on store shelves across Texas and Arkansas.
The latest arrests came August 24 in Tyler, where Xiaoqiang Yu and Minlin Chen were taken into custody after police saw one of the men placing altered gift cards inside local stores, according to KLTV. Investigators recovered hundreds of tampered cards and tools from a vehicle and nearby hotel.
Authorities said cards recovered during a single day represented more than $100,000 in potential consumer losses. The investigation had already led to the June 26 arrests of Deshun Zheng and Minjiang Chen in Sugar Land after investigators said they observed them placing compromised cards in stores.
All four defendants are charged with fraudulent use, possession or tampering with gift card data. The Arkansas Attorney General’s Office and Willis police are pursuing separate cases connected to activity in their jurisdictions. The charges are accusations, and the defendants are presumed innocent unless proven guilty.
The Cards Were Altered and Returned to Store Shelves
Investigators say gift cards were taken from retail displays and brought to hotel rooms or residences, where the security covering activation information was removed.
The suspects allegedly recorded each card’s serial number and activation code before resealing the packaging and returning it to stores. A shopper could then purchase what appeared to be an untouched card without knowing that someone else already possessed the information needed to access its balance.
Once a customer paid for and activated a compromised card, investigators say the balance could be drained electronically using the previously recorded information.
A Walgreens Investigation Led to the First Arrests
The case began in June after the Walgreens Major Crimes Investigative Team found suspicious gift cards on store shelves in Willis and alerted the Texas Financial Crimes Intelligence Center. Walgreens provided investigators with an image of a suspect and a white Lexus NX.
Agents later identified a second suspect and another vehicle. On June 26, the FCIC and Sugar Land Police Department arrested Zheng and Minjiang Chen after observing activity involving tampered cards at local stores.
By July, investigators had connected suspected activity involving the Lexus to Arkansas, prompting coordination with retailers and law enforcement outside the original Texas investigation.
The Tyler Search Uncovered Cards Intended for More Stores
The investigation reached Tyler on August 24, when FCIC agents and local police arrested Yu after authorities said he was observed placing altered cards at Walmart and Walgreens locations.
A search of his vehicle uncovered bundles of compromised cards that investigators said were intended for additional stores. Agents then searched a nearby hotel, arrested Minlin Chen and recovered hundreds more cards along with tools allegedly used to tamper with and reseal them.
Texas authorities described the activity as a coordinated operation rather than isolated incidents. Investigators worked with retailers to identify suspicious cards and remove them before customers could purchase them.
Texas Made Large Scale Gift Card Tampering a First Degree Felony
Texas created a specific criminal offense covering fraudulent possession, use and tampering involving gift cards in 2025. Texas Penal Code Section 32.56 took effect September 1 of that year.
The law covers conduct including altering gift card packaging, possessing redemption information without authorization and placing compromised unactivated cards back onto retail displays. An offense involving 50 or more affected cards can be charged as a first degree felony.
Texas investigators have already encountered other high volume cases. In a separate Central Texas investigation announced in April, authorities recovered 11,563 altered cards and estimated that nearly $5.7 million in potential consumer losses had been prevented.
How to Check a Gift Card Before Buying It
The Texas FCIC recommends choosing cards from secure or sealed displays when possible and examining the packaging before purchase. Shoppers should look for damaged packaging, exposed PIN areas, altered barcodes or signs that protective material has already been removed.
Before leaving the store, buyers can ask the cashier to confirm the card’s activated balance and should keep the purchase receipt until the recipient has successfully used the funds.
If a newly purchased card shows a zero or unexpectedly reduced balance, the retailer and card issuer should be contacted immediately. The card, packaging and receipt should be preserved, and photographs can help document visible signs of tampering.
A suspicious card that has not been purchased should be handed to store employees rather than returned to the display. The FCIC also recommends reporting suspected gift card tampering to local law enforcement.