It’s a given – if money is involved, scammers are involved. And scammers love gift cards. That’s because gift cards are tough to trace, and not subject to the same regulations as credit and debit cards.
Yet, gift cards are a great way to reward someone, and give the friend, family member, or employee the means to purchase a truly-wanted gift using the pre-loaded monies on the card.
Here’s how to avoid scammers when you buy gift cards.
What Is a Gift Card Scam?
Basically, a gift card scam occurs when someone loads the card with money, and a scammer finds a way to access that money. If you or someone you know is a victim of a gift card scam, the Federal Trade Commission wants to know about it. The FTC reports that gift card scammers account for 26% of fraud reports the agency investigates.
The FTC noted that reports of gift card scams where people have lost money have tripled since 2017. Many times the scam takes place during the holiday season.
How Do Gift Card Scams Work?
There are two main ways that scammers commit fraud using gift cards.
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- Someone asks you to put money on a gift card as a way to pay fees, services or bills, such as monies owed to a utility company or government agency.
- Someone finds a way to learn the numbers on your gift card and uses that gift card information to pay for purchases.
What Gift Cards Are Used in Scams?
Any gift card can be hacked by scammers. No company is exempt, although the “heavy hitters” such as Amazon, eBay, and Google are most frequently targeted. Here’s our list:
Most Common Targeted Gift Cards
1. eBay Gift Card – Scammers often sell gift cards on online auction sites. You’ll pay less for those cards, but as the saying goes “You get what you pay for.”
2. Amazon Gift Card
3. Apple Gift Card
4. Google Play Gift Card – The Google play card is a frequent target.
5. Walmart Gift Card
6. Vanilla Gift Card
7. Target Gift Cards
8. iTunes Gift Card – The iTunes card is frequently targeted by scammers who are especially adept at nabbing gift card balances.
Why Are Scammers Attracted to Gift Cards?
Gift cards have become a favorite tool for scammers due to several reasons. While they offer a convenient way to reward others and make purchases, scammers exploit their characteristics for fraudulent activities. The main factors that make gift cards appealing to scammers include:
- Difficulty to Trace: Gift card transactions are challenging to track, making it difficult to trace the flow of funds and identify perpetrators.
- Lack of Regulations: Unlike credit and debit cards, gift cards are not subject to the same regulations, offering scammers more leeway to exploit them without facing immediate legal consequences.
- Anonymity: Scammers can use gift cards anonymously, as they don’t require personal identification like credit cards. This anonymity makes it harder to identify and apprehend the individuals behind the scams.
- Ease of Use: Gift cards are easily accessible and can be purchased from various retailers, making them a convenient tool for scammers to manipulate victims.
- Gateway to Identity Theft: Scammers can use gift card scams to not only steal money but also gather personal information, leading to potential identity theft.
- Limited Recovery Options: Unlike credit or debit card disputes, recovering funds lost to gift card scams is complex and often unsuccessful, making them an attractive option for scammers.
|Factors That Attract Scammers to Gift Cards||Reasons|
|Difficulty to Trace||Challenging to track transactions, aiding anonymity|
|Lack of Regulations||Less regulated, allowing exploitation|
|Anonymity||Can be used without personal identification|
|Ease of Use||Easily accessible and manipulated|
|Gateway to Identity Theft||Can lead to stealing personal information|
|Limited Recovery Options||Complex recovery process, favorable for scammers|
Due to these factors, it’s crucial for individuals to stay informed and vigilant to protect themselves from falling victim to gift card scams.
How to Avoid Gift Card Scams and Gift Card Fraud
As we stated, gift cards are an awesome way to give a gift. Here’s how to continue to use them, while being aware of our cautionary tips:
1. Know that there is never a time that the IRS, the social security administration or any government agency would contact you by phone, text or email and request gift cards be sent in lieu of payment, to pay an owed amount. If you owe money to a government agency or need to pay taxes, contact the agency directly.
2. Similarly, be leery of phone calls, texts or emails from such agencies or utility companies, such as your power company. If you get a phone call, email or text message about utility bills, call the company directly.
Such calls are a definite scam alert since no company wants to be paid for services with a gift card in the real business world.
3. Be cautious when you’re purchasing gift cards from a wall of them at a store, which is common in the retail industry. It’s possible that scammers have used a magstripe reader to scan the card’s ID number. A scammer will take a handful of cards from the display and use the magstripe reader to download the numbers.
Once they have the gift card number, all they need is the card numbers pin – make sure the pin on the card you purchase has not already been scratched off. After reading the card number the scammer may also scratch off the pin, and make note of it. The pin is like the security code on a credit card.
4. Watch the cashier person when you’re putting money on a card. That’s a scam that can happen in stores when you buy gift cards. The cashier takes the “loaded” card to activate it for you but switches it with an “empty” different card where no monies have been paid on it.
5. Never provide gift card numbers to someone you don’t know. Remember that gift cards are to be redeemed at the time of purchase, whether in stores or online. The purchaser provides the card number at the time of purchase.
6. Report any instances of fraud to the FTC and also make a police report. Make a claim against the company as well.
7. If you’re a gift card recipient, use the card promptly, within the first nine months.
8. Never buy gift cards singly or as a batch on eBay, Facebook marketplace or any online auction site. Those are common gift card scams.
9. When you get an email, text or phone call that claims you’ve won a prize or cash, don’t believe it. That’s a common scam, especially with mass emails sent by professional scammers, according to a new report from the FTC.
In fact, by clicking open that email or text, you may be opening the door not only to malware but also to identity theft.
Frequently Asked Questions (FAQs)
What is a gift card scam and why are scammers attracted to gift cards?
A gift card scam occurs when someone loads a gift card with money, and scammers find a way to access that money. Scammers are drawn to gift cards due to their difficulty to trace, lack of regulations, anonymity, ease of use, and potential for identity theft. They exploit these characteristics to carry out fraudulent activities with minimal risk of detection.
How do gift card scams work?
Scammers commit fraud using gift cards in two main ways. First, they manipulate victims into loading money onto a card as payment for fees or bills that are often non-existent. Second, scammers obtain gift card numbers through various means and use these numbers to make unauthorized purchases before the victim realizes the card has been compromised.
Which gift cards are commonly targeted by scammers?
While any gift card can be hacked, scammers frequently target popular brands like eBay, Amazon, Apple, Google Play, Walmart, Vanilla, Target, and iTunes. These brands’ widespread use and familiarity make them convenient tools for scammers to exploit.
How can I avoid falling victim to gift card scams and fraud?
To protect yourself:
- Never use gift cards as payment to government agencies or companies.
- Verify payment requests through official channels before taking any action.
- Exercise caution when purchasing gift cards, especially from store displays that may have been compromised.
- Safeguard the card’s PIN by ensuring it remains hidden and unscratched.
- Report instances of fraud to the Federal Trade Commission (FTC) and file a police report.
- Use gift cards promptly after receiving them to reduce the window of opportunity for scammers.
- Avoid purchasing gift cards from online auction sites, where scams are common.
- Be skeptical of unsolicited emails or calls that claim you’ve won prizes, as they may be scam attempts.
Can gift card scams be traced?
Unfortunately, gift card scams are difficult to trace due to their inherent characteristics, such as anonymity and limited transaction visibility. This makes them an attractive tool for scammers looking to exploit vulnerabilities in the payment system.
Can I recover money lost to gift card scams?
Recovering money lost to gift card scams is challenging, as it lacks the same level of protection and dispute resolution as credit or debit card transactions. While some victims have managed to reclaim funds from platforms like Amazon, success is not guaranteed. Reporting the theft to the FTC, local law enforcement, and the issuing store or company is crucial.
How can I protect myself from gift card scams?
Protect yourself by staying vigilant and informed about common scam tactics. Stay cautious when sharing personal or financial information and adhere to the provided tips to minimize your risk of falling victim to gift card scams. Educating yourself and others about these scams is key to prevention.
Conclusion: Safeguarding Your Finances and Identity from Gift Card Scams
In a world where scammers seize every opportunity to exploit unsuspecting victims, it’s crucial to stay informed and vigilant. Gift cards, while a convenient and thoughtful way to give and receive, have unfortunately become a favored tool for scammers. The allure of anonymity, ease of use, and the potential for untraceable financial gain make them an attractive option for those looking to deceive.
As gift card scams continue to evolve, the responsibility lies with each individual to protect themselves and their loved ones from falling victim to such fraudulent activities. By understanding the common tactics scammers employ, recognizing the warning signs, and taking proactive measures, you can significantly reduce your risk of becoming a victim.
Educate yourself about the red flags of potential scams, such as unsolicited requests for gift card payments or prizes, and always verify the legitimacy of such claims through official channels. Be cautious when purchasing gift cards, especially from open displays, and keep the card’s PIN hidden and unscratched to thwart potential theft.
In cases where you suspect or experience a gift card scam, swift action is essential. Report any instances of fraud to the Federal Trade Commission (FTC) and file a police report to help authorities track down and apprehend scammers. While recovering lost funds from gift card scams may be challenging, your diligence in reporting the incident can contribute to ongoing efforts to combat such illicit activities.
Remember, while gift cards can bring joy and convenience, they can also be exploited by scammers seeking financial gain and personal information. By staying informed, cautious, and proactive, you can safeguard your finances and identity from the dangers of gift card scams, ensuring that the act of giving remains a positive experience for all parties involved.
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