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Stay Away from Grift Cards and Gift Card Scams


A wall of various gift cards in a convenience store.
Learn about the most common types of gift card scams and what you can do protect yourself against them.

Gift card scams are lucrative. In 2022, the U.S. Federal Trade Commission (FTC) said they received almost 50 thousand reports of gift card fraud, totaling losses over $250 million.


Gift card scams can be conducted in so many ways that it's hard for them not to be lucrative. Whether it's by email or by phone, gift card scams cut debit and credit cards out of the equation while still stealing money. Just buying a gift card can sometimes be all it takes to fall victim to these scams.

 

It's not a case of there being a security flaw or a vulnerability with one certain brand name of gift cards over another; they're all susceptible. It's about the numbers and the barcode on the back of the card. If the store can encode a money amount and activate that card when you purchase it, then it can be a vessel for scammers.

 

Scammers gravitate towards gift cards because they're instant payments that can be accessed from anywhere in the world. They can harvest funds and cash them out or move them to another account; all it takes is the actual card itself, or even just a picture of the card's serial numbers and pin code.

 

Payment cards like gift cards, debit cards, and so on are simple representations of money stored in a database. When you're buying something and swiping a card, the database that card is connected to updates to reflect that you spent or cashed out your funds.

 

Scammers are the only people that will ever demand you buy gift cards and provide the serial information on the back. No legitimate businesses ever operate with gift cards as the sole (or preferred) form of payment.



Tricks of the Trade

Unfortunately, there's a big bag of tricks and impersonations that gift card scammers pull from.

 

Some of the highlights include:

  • Pretending to be someone from the IRS, who threatens your eventual arrest unless you pay fines or taxes (with gift cards)

  • Impersonating law enforcement and saying they've got an arrest warrant and they'll get you, unless you pay your fine with gift cards

  • Acting as the U.S. Postal Service, asking you to pay the remaining amount for postage on an incoming package

  • Masquerading as tech support, commonly activated from those fake web popups that beg you to call tech support

  • Pretending to be a friend or a relative who's in a bind; this is also sometimes called the Grandchild Scam

  • Faking your utility company and threatening to turn off your pick of the water, power, or gas; that is, until you pay

  • Impersonating a lottery and saying you've won, and all they need is for you to pay the tax upfront (in gift cards)

  • Pretending to be your boss, asking you to go out and buy gift cards for a variety of excuses; to pay a contractor, to give away in promotions, and more

  • Scammers sometimes even send out checks, begging and apologizing that you were sent too much money; they ask you to send back the difference with a gift card (and the check bounces, of course)



Other Cases of Elaborate Gift Card Fraud

Like we mentioned at the beginning, sometimes you can become a victim to gift card scams by simply just purchasing one with no pretense. This kind of gift card fraud happens the most around Christmas, when gift card sales are naturally spiking.

 

Here's how it works: gift cards that are on display and available for customers to pick out themselves are shoplifted and brought back to the scammer's base of operations. With the packaging then carefully cut open, one of the cards is activated and gets a typical amount of money (like $50) added to it. They take a picture of the activated card's bar code and print stickers that are overlayed on the bar codes of other shoplifted cards. This way, all the cards now have the scammer's bar code on them. The cards are carefully repackaged, brought back to the store, and put back on display for unsuspecting victims to purchase them and load up the scammer’s card with cash. The money is taken quickly afterwards.

 

The best way to avoid falling for this kind of elaborate gift card fraud is to purchase gift cards behind checkout counters or other locations where customers can't easily access them.

 

When you’re buying cards that are out on display, pick out cards that are in the middle or the very back, as tampered gift cards have been mostly found to appear in the front.

 

Before having the cashier scan the card, rub your fingers over the edges of the bar code to see if it feels like a sticker that can be peeled off.



Red Flags

As with any scam, there's a lot of specific red flags that should tip you off something's not right.

 

In gift card scams, some of those red flags include:

  • Being threatened

  • Having an unfamiliar transaction requested

  • The scammer giving you a strong sense of urgency

  • An urgent, candid plea for help because the scammer is embarrassed

  • Being warned not to contact law enforcement

  • Being told you won a lottery you didn't enter

  • Being contacted first through SMS texts, and having the scammer later wanting to move the conversation to another platform, like social media private messages or Discord



Report Gift Card Scams

If you ever think you've been a victim of a scam, contact the FTC through the FTC Complaint Assistant or call their toll-free number at 1-877-FTC-HELP.

 

In addition, the FBI wants to know about financial scams. You can report money fraud directly to the FBI at IC3.gov.

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