Whether it's your birthday, a holiday or a 'just because' gesture, you're almost guaranteed to purchase or receive a gift card from a friend, family member or acquaintance at some point throughout the year. Gift cards are a great way to show someone you care by giving them more of a choice if they are purchasing a product, or by giving more of an ‘experience', like dinner or the movies, for example. However, there is a bad side to gift cards that everyone should be aware of: gift card scams.

According to the FTC, consumers reported 48,800 cases of gift card fraud or reload card fraud totaling more than $228 million in losses last year. That's more cases than the following other types of cases reported individually: bank transfers or payments, wire transfers, cash, check or money order fraud. Gift cards are a popular choice for scammers because they are relatively untraceable and can be easily redeemed. Furthermore, once the transaction is complete, it's difficult to reverse.

So how does it all happen? Typically, scammers will try to trick individuals into purchasing gift cards and then collect the card information, such as the card number and PIN. The FTC reported that scammers usually tell people the specific gift card brand to buy and where to buy it, so remember to stay cautious of these specific demands. Below are the different ways gift card scams may occur.

Types of gift card scams:

• Impersonation Scams: This is the most common type of gift card scam, where scammers may impersonate a trusted individual or organization, such as a government agency, a utility company, a tech support service, a family member in distress or even a popular retailer. They will claim that you owe money or need to pay a fine, and they'll insist that you make payment using gift cards. They often use fear or urgency to pressure you into complying.
• Online Marketplace Scams: When buying items online scammers might offer a deal that seems too good to be true. They'll request payment in the form of gift cards, promising to ship the item afterward. Once you provide the gift card codes, they disappear without delivering the product.
• Prize or Sweepstakes Scams: Scammers may contact you via phone, email or social media, claiming that you've won a prize or lottery. To claim your winnings, they'll ask for a payment or processing fee in the form of gift cards. Legitimate sweepstakes or lotteries do not require such payments.
• Romance Scams: In online dating scenarios, scammers may create fake profiles and build emotional connections with their victims. Eventually, they'll fabricate a crisis or urgent situation and request gift card payments as a way to help them out.
• Tech Support Scams: Fraudsters may pose as tech support representatives from well-known companies. They'll claim that your computer is infected with viruses or malware and ask you to purchase gift cards to pay for their services.
• IRS or Tax Scams: Scammers may impersonate the IRS or tax authorities, claiming that you owe back taxes or are involved in some tax-related issue. They'll threaten legal action or arrest and demand payment via gift cards.
• Charity Scams: Scammers may contact individuals during disasters or holidays, posing as charitable organizations seeking donations. They'll ask for gift card codes as a convenient and untraceable method of contributing to their "cause."

Falling for these types of gift card scams can lead to financial losses and personal information exposure. Below are ways to help avoid falling victim to these scams.

Red flags for gift card scams:

• Unsolicited communication: Be cautious if you receive unexpected phone calls, emails or messages requesting payment using gift cards. Scammers often impersonate trusted organizations, friends or family members.
• Urgency and pressure: Scammers often create a sense of urgency, claiming you need to act quickly to resolve a problem or avoid legal consequences. They may say things like, "You must pay right now" or "This is an emergency."
• Unusual payment methods: Scammers may ask for payment from specific brands of gift cards. Be cautious if you're asked to buy gift cards from retailers you don't normally use.
• Caller ID spoofing: Scammers can manipulate caller ID to make it appear as if they're calling from a legitimate organization or government agency. Don't trust the caller ID alone; verify the request independently.
• Grammar and spelling errors: Scam emails and messages often contain typos, grammatical errors or awkward language. This can be a sign of a scam.
• Refusal to provide details: Scammers may be vague about why they need the gift cards or how they will be used. They may dodge questions or provide evasive answers.
• Caller's demeanor: Scammers can be aggressive, threatening or overly persistent. They may become hostile if you question their legitimacy.

Additional tips:

• Be skeptical of unsolicited requests: Scammers often pose as government agencies, utility companies, tech support or even friends and family to convince you to buy gift cards. Always be cautious when receiving unexpected calls, emails or messages requesting gift card payments.
• Verify the request: If someone asks you to buy gift cards for any reason, verify their identity by contacting them directly using official contact information. Do not use the contact information provided in the suspicious message.
• Check for urgency and pressure: Scammers often create a sense of urgency or pressure you to act quickly. Take your time to verify the situation and don't rush into buying gift cards.
• Never share card details: Never share the card numbers, PINs or any information from the back of a gift card with anyone you don't trust explicitly. Legitimate organizations will not ask for this information.
• Be cautious online: Be cautious when dealing with online marketplaces, classified ads and social media. Scammers may try to sell non-existent items or services in exchange for gift cards.
• Ignore unsolicited emails and messages: Delete unsolicited emails or messages that ask for gift cards. Avoid clicking on links or downloading attachments in suspicious messages.
• Educate yourself and others: Make sure your family and friends are aware of gift card scams and know how to recognize them. Sharing knowledge about these scams can help protect others.
• Monitor your accounts: Regularly check your financial accounts for unauthorized transactions and keep an eye on your credit report to detect any suspicious activity.
• Use secure payment methods: When making payments, use secure methods like credit cards or electronic transfers whenever possible. Gift cards are not a safe or recommended method for paying bills or debts.
• Online research: Search online for information about the specific gift card scam or the phone number/email address associated with it. Scammers often use the same tactics repeatedly, and you may find warnings or reports from others who have encountered the same scam.
• Check with trusted sources: If you're unsure whether a request is legitimate, consult with a trusted friend or family member. They may provide a different perspective and help you recognize potential scams.

In the unfortunate event you fall victim to a gift card scam, it's important to take immediate action to minimize the damage. Also, you should report the incident to the relevant authorities. Below are the steps you should follow.

What do do if hit by a gift card scam:

• Stop All Communication: If you're still in contact with the scammer, cease all communication immediately. Block their phone number or email address to prevent further contact.
• Document Everything: Gather all the information related to the scam, including emails, text messages, or any other communication with the scammer. Take screenshots or photos as evidence.
• Report the Scam: Report the scam to your local law enforcement agency and provide them with all the information you've gathered. You can also report the scam to the Federal Trade Commission (FTC) at ftc.gov/complaint or by calling 1-877-FTC-HELP (1-877-382-4357).
• Contact the Gift Card Issuer: If you've purchased gift cards as part of the scam, contact the gift card issuer (e.g., Visa, Mastercard, iTunes, Google Play, etc.) immediately. Provide them with any relevant information, such as the card numbers and purchase receipts, to see if they can help.
• Notify Your Financial Institution: If you've shared any banking or credit card information with the scammer, contact your bank or credit card company to report the incident. They can advise you on how to protect your accounts and may issue a new card.
• Warn Friends and Family: Inform your friends and family about the scam to prevent them from falling victim to a similar scheme. Scammers often target multiple people within the same network.
• Check Your Accounts: Regularly monitor your financial accounts for any unauthorized transactions. If you notice any suspicious activity, report it to your bank or credit card company immediately.
• Consider Reporting to Social Media Platforms: If the scam involves social media platforms, report the scammer's account to the platform. Many platforms have reporting mechanisms for fraudulent accounts and activities.
• Seek Support: Falling victim to a scam can be emotionally distressing. Don't hesitate to seek support from friends, family or a counselor if needed.

Remember that prevention is the best defense against scams. Beware of gift card fraud by being skeptical of unsolicited offers, verifying the identity of anyone requesting money or personal information and always double-checking with trusted sources before taking any action in response to suspicious requests.

Remember that scammers are skilled at manipulation and can be very convincing. Trust your instincts, and if something feels off or too good to be true, it probably is. Stay informed, stay cautious and protect your finances and personal information from gift card scams and other types of fraud.

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Published on 09/28/2023