Gift cards have grown from substitutes for paper gift certificates into a new type of currency. Their increased popularity and versatility have also opened the door to a string of common gift card scams. Payments made with the plastic cards are usually considered safe and easy. That’s why it’s so easy to get caught up in some of these scammers’ traps!
What Is a Gift Card Scam?
We all know about scams in one form or another. We’ve been warned about giving out information to callers. Some scammers profess to be the government, credit card companies, and all types of interest groups that they really aren’t. On the other end of the call, someone’s hoping you trust them enough to give up your info. Once the scammer has your social security number, account number, and other info, they can use your credit to get all kinds of things.
The internet is another place where scammers are always popping up! It seems like there are more scams than legitimate businesses. Now that your cell phone is available to telemarketers, it’s also open to scams.
It’s never been more important to stay aware of popular scamming trends. That includes many gift card scams happening online and over the phone. They don’t happen a lot…yet. But the more successful any scheme is, the more likely it is to grow.
Recognizing a Scam
Sometimes scammers are focused on getting information. Other times, they go straight for the value of the gift card. One way to prevent being a victim is to recognize the red flags. Another is to recognize new scams and avoid them. Scammers have nothing to lose by persuading you. They know what to say and how to say it!
Gift Card Scams to Avoid!
1. The Tax Payment Scam
The scammers on this one make it easy to believe you that you haven’t paid your income tax in full. It starts with a voice message saying they’re an agent from the IRS. The message says you’re going to be arrested for tax evasion. The only way to pay what you owe is with iTunes or other gift cards.
Once you buy the gift cards, you provide the scammer with the gift card numbers over the phone. How convincing are the scammers? Enough to swindle Americans out of millions of dollars using it. Victims lost $20 million due to these scams in 2015, and the number is increasing. The losses grew to $53 million during the first three quarters of 2018.
The number of scammers requesting gift card payments is increasing, too. The portion of IRS-related gift card scams increased from 7% in 2015 to 26 percent in 2018.
2. Jury Duty Fraud
A similar scam is one where someone calls claiming to be a state trooper. They alert you that you missed jury duty and there’s a warrant for your arrest. The only way to prevent going to jail is by purchasing a Green Dot MoneyPak card to use as a bond. Once the case is cleared, you’ll get the money back. Of course, the case never gets cleared because it is bogus!
3. Stolen Card Info
You know that gift cards are worthless until activated at the cash register. One way scammers get around the process is by recording the number of a card while it’s still in the store. They keep checking online until a cash amount shows up for the card. They can either use the balance online or make a physical copy and use the gift card in stores.
4. 3-Way Balance Check
This scam works when someone lists a gift card for sale on a website. A fake buyer makes an offer and asks the seller to call the merchant using three-way calling to confirm the balance. The fake buyer intercepts the number while the seller keys it in. They then have the info they need to use the gift card without buying it.
Many people don’t realize gift card scammers can drain the cards without having them in their possession. It makes sense that they want to confirm the balance. The seller doesn’t realize the scam until the balance of the gift card is gone.
5. BOT Thief
Something called the “GiftGhostBot” lets hackers run through a retail store’s online gift card balance check system. They search for a valid gift card number with an activated balance. Hackers can either use the balance to make purchases or sell the card online.
6. Package Tampering
In spite of efforts to protect gift card info, there are still gift card scams involving stolen numbers. They scratch off the covering for the PIN and re-cover it with a sticker or nothing at all. They take extra pains to restore special packaging, too. Make sure the gift cards you buy aren’t missing any special packaging or PIN number coverings.
7. The Discount Scam
The locations where people can sell unused gift cards online has led to some common gift card scams. Some locations only require the codes and not the actual gift cards. This allows buyers instant access to the cards without the cost and hassle of shipping. Unfortunately, it also allows scammers the chance to collect twice. Sometimes they sell gift cards online for cash. As soon as the company confirms the balance and accepts the card, the scammer uses the card to make a purchase. Often, the buyer doesn’t realize the fraud until they try to use the balance.
These sites give people a place to earn some extra cash on gift cards they don’t need. They also give buyers a way to get discounts on gift cards for things they want. Considering the risk of getting scammed, there are better ways to save money on items you want to buy.
8. The Checkout Switch
Unlike most other gift card scams, this one occurs when an employee is the scammer. You take the gift card to the cashier to check out. They might activate the card you gave them and then give you a different one. They might also activate a different card and give you the one you gave them. In either case, the cashier keeps the activated card, and you take home a blank.
9. Romance Scams
If you think that person you “connected with” online is the special one you’ve been looking for, it may be intentional. One of the most popular romance scams happens after someone special spends time romancing you online. Once they feel confident they’ve got you hooked, they ask for money. Sometimes they say it’s to come and visit you in person. It might also be for a medical emergency.
Some of these scammers ask for money by wire or gift card. That warm and fuzzy feeling won’t last long once you realize you’ve been scammed! Last year, people reported losing $143 million to romance scams, making these the most expensive scams of all.
10. Selling Non-Existent Items
Posting an online classified for an item you’re looking for might seem like the easiest way to find it. The problem is that there are scammers out there with an imaginary warehouse that contains everything buyers might be looking for.
When the seller responds to your ad, they have a reasonable price on the item, which is probably brand new and still in the box. Even if they send pictures, you have no way of confirming they’re legitimate. They want you to pay for the purchase with a Green Dot MoneyPak card. There’s no local pickup available because they live so far away. Of course, you have to pay the shipping charges too!
Once you provide the information for the gift card, the seller promises to ship it out right away. By the time you realize you’ve been scammed, the seller is already gone.
Gift Card Scams and Seniors
Scammers often target seniors, focusing on areas of the greatest concern. Many seniors get targeted with the IRS scam. Other scams include asking them for gift card payments so they can receive their Medicare card.
Seniors are also vulnerable to romance scams like those listed above. Many seniors who have lost their spouse look for companionship online. One reason seniors are so vulnerable is the denial of that very fact. While only 10% of older Americans report feeling susceptible to scams, double that number are estimated to be victims of financial abuse.
People of any age are vulnerable to gift card scams. Most of us get scammed thinking we’re getting a bargain. In some cases, you don’t even know you’ve been scammed until you use your gift card.
Seniors are most vulnerable to scams that focus on important issues to them. Scammers know this and constantly look for new ways to get their money. Seniors should never provide any information over the phone. Whenever a company or agency contacts them, they should hang up and call them back using the correct number. It’s the only way to ensure the caller is who they say they are.
Some retail stores are doing what they can to cut down on scammers targeting seniors. They question them about their reasons for buying gift cards with large amounts. Some turn them down for these purchases. Although everyone advises you to report scams to the police, little gets done. Issues of jurisdiction and an inability to trace calls or gift cards make catching them difficult.
Tips on Avoiding Gift Card Scams
- Reputable businesses and government agencies never ask for payments using gift cards. Never. Any time you get a call requesting a gift card payment, hang up.
- Never use the phone number or email address a caller gives you. If you aren’t sure a debt is legitimate, look up the right number and call them directly.
- Buy a gift card from the middle of the rack.
- Keep your eye on the gift card while purchasing it. Compare the gift card number to the one on the receipt right after you check out. Make sure the card you paid for is the one you got.
- Shop in reputable stores with a good reputation. Businesses are just like people. Ethical practices matter, no matter what they sell or how large the business is. There’s a lot less risk of getting scammed if you know the person behind the counter.
- If someone asks to listen in while you confirm the balance on a gift card, don’t do it. It’s a scam.
- Avoid placing ads on Craigslist or other classifieds “looking for” an item.
- When purchasing a gift card, check the packaging and pin. Make sure it hasn’t been tampered with, and none of the PIN is revealed. If it is, alert the cashier of the store and buy a different card.
- Get an answering machine. Many scammers hang up when they hear the recorded message.
- When giving gift cards, include the receipt for the activation.
- Research sellers before buying items they have for sale.
- Keep track of your gift card balances and report any disappearances.
- Use gift cards soon after you obtain them. This prevents hackers who use bots from finding the information in a store’s gift card system.
- Report scams to the FTC at www.FTC.gov/Complaint
Pros and Cons of Gift Cards
Gift cards are great for giving to all kinds of people. They ensure you always give a loved one or friend a gift they really like. The popularity of gift cards has led to an ever-growing number of gift card scams. In spite of their convenience, the expertise of scammers to use your gift cards makes it more problematic for everyone.
Instead of relying so heavily on gift cards, maybe it’s time to start choosing gifts for the individual. Gift cards really aren’t necessary as a separate form of currency. The bottom line is that a legitimate business or agency won’t ask for a gift card payment. If buying a gift card is your only option, it’s a gift card scam!
If you’re looking for a special gift at a discount price, shop at one of Monte de Piedad’s 13 San Diego locations. We’ve been a trusted member of the San Diego community for many years!