Gift Cards: Preferred Payment Method of Scammers

Gift cards are a popular and convenient way to give gifts. Unfortunately, they are also scammers’ new favorite way to steal money. But knowing how these scams work can help you avoid them.

According to the Federal Trade Commission’s (FTC) new Data Spotlight, gift cards and reload cards are now the number one reported method of payment for imposter scams. In addition, the percentage of consumers who told the FTC that scammers demanded payment with a gift card or reload card has increased 270 percent since 2015.

Scammers will say anything to get your money. And they are often experts at playing into your fears, hopes or sympathies. In imposter scams, scammers might pose as IRS officials and claim you’re in trouble for not paying your taxes, a family member with an emergency or even a public utility company threatening to shut off service to your home. They may even call with great news – you’ve won a contest, lottery or a prize! But to claim it, you first need to pay the required fees with a gift card. No matter the story, they all have in common an urgent need for you to send money immediately.

Gift cards are attractive to scammers because they act like cash. They offer anonymity and are extremely difficult to reverse once used. Reports to the FTC say scammers are instructing consumers to purchase gift cards at local retail shops like Walmart, Target, Walgreens and CVS. In some cases, the scammer stayed on the phone while the consumer went to the store. Once the card or cards are purchased, the scammer then demands the gift card number and PIN on the back of the card. Those numbers allow instant access to the money that was loaded onto the card. And once the scammers have access to that, your money and scammer are gone, usually without a trace.

Of those people who paid a scammer with a gift card, 42 percent used iTunes or Google Play cards. Other gift card companies that scammers most often requested include: Amazon, Steam and MoneyPak.

Remember, gift cards are for gifts, not for payments. If someone requests payment with a gift card, don’t do it. It’s most likely a scam.

If you paid a scammer with a gift card, report it as soon as possible. Call the company that issued the card and tell them the gift card was used in a scam. Ask them if they can refund your money. Also, tell the store where you bought the gift card as soon as possible.

The FTC offers these helpful tips if you receive or give a gift card this holiday season:

  • Buy gift cards from sources you know and trust. Avoid buying gift cards from online auction sites, because the cards may be counterfeit or stolen.
  • Inspect a gift card before you buy it. Check that none of the protective stickers have been removed. Make sure codes on the back of the card haven’t been scratched off to show the PIN number. Report any damaged cards to the store selling the card.
  • Keep the receipt with the gift card. Whether you’re giving or getting, try to keep the original purchase receipt, or the card’s ID number, with the gift card.
  • Read the terms and conditions of the gift card. Is there an expiration date? Are there fees to use the card, or for shipping and handling? Will fees be taken out every time you use the card, or after it sits unused for some period of time?
  • Use the card as soon as you can. It’s not unusual to misplace gift cards or forget you have them. Using them early will help you get the full value.
  • Treat gift cards like cash. If your card is lost or stolen, report it to the card’s issuer immediately. You might not get back the money left on the card – or you might get some, perhaps for a fee. You might need to show the receipt and the ID number on the card. Most issuers have toll-free telephone numbers you can call to report lost or stolen cards – find it on the card or online.

 

 

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