ARLINGTON, Va. — Law enforcement and industry officials say 2008′s holiday season was the time when criminals began to focus on how to compromise gift cards and other prepaid products.

It appears that most of the time CUs that sell the cards are likely not to be liable for any losses.

Prior to this holiday season, gift card fraud had been confined mostly to the actual theft of active gift cards or the use of stolen credit or debit card numbers to purchase gift cards. But this past season saw at least one instance of an organized ring of thieves using gift cards to manufacture fake debit and credit cards using stolen debit and credit card numbers. Further, at least one major issuer, American Express, acknowledged having sold some gift cards this holiday season that had been compromised and used somewhere in the firm's gift card and distribution chain before they reached the consumer.