It appears that some crooks are not stupid.
Clever Pre-Paid Card Scam Hits Canada by Steve Rhode
In the latest frauds, investigators believe the suspects are snapping up prepaid “Vanilla” Mastercard or “Treat” VISA cards, widely available at gas stations and convenience stores, and sometimes using counterfeit credit cards to buy them.
Criminals then alter the magnetic data encoding on the prepaid cards to that of a stolen credit card number to buy items. Sometimes suspects make purchases at one location and later get cash back when they convince a store merchant at another to return the item. Source