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Common Gift Card Scams and How To Avoid Them

By on 2021-04-29 15:15:22, 0 Comments

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Gift cards are very similar to prepaid debit cards that are funded for future use. There are two types: open-loop gift cards that can be utilized at multiple merchants just like a regular debit card. And closed-loop gift cards are typically not reloadable and only good for one merchant. Digital or e-gift cards are also used, although 75% of all gift cards are still physical.

Gift card scams are fraudulent activities where unsuspecting victims are robbed of their money by stealing the funds on their gift cards. The damage is typically limited to the amount or the value of the gift card. These scams are also not as prevalent as credit cards or other similar scams. Regardless of value or amount, no one deserves to be scammed out of their money.

 

How Do Gift Card Scams Work?

Voucher cards or other gift card scams come in various forms. Here are the most common ones and how they work.

Gift Card as Payment

Victims will usually get a threatening phone call or voice mail from a “Police Officer” or even from a “Representative of the IRS.” The bottom line, the victim must use a gift card to pay the fine or bail. As the victim repeats the gift card numbers over the phone, the scammers will drain the value of the gift card.

Balance Check

A fake buyer will ask the seller to confirm the balance on the gift card by calling the merchant in a three-way call. The fake buyer records the touch-tone presses to obtain the gift card numbers, then uses them without paying.

Hacking

Hackers enter a store’s online gift card balance check system and look for a valid gift card number with an activated balance utilizing a bot (GiftGhostBot). The match found by the bot will either be used by the hackers or sold off on the dark web.

Stolen or Tampered

The fraudster records the gift card number from a display and waits for someone to buy and load the compromised gift card. The scammer would then utilize it to make a purchase online or a duplicate plastic card for in-store purchase.

Due to this, some companies have added security features like scratch-off PINs and special packaging. Some fraudsters, however, simply tamper with the gift card then put it back on the shelf.

Switched Gift Card

This scam is an inside job, so to speak. The cashier will either activate a different card and hand back the original to the buyer or will hand them an inactive card. Either way, the cashier will get the activated cards while handing out blanks.

Discount Gift Card Double-Dip

The popularity of gift cards gave birth to discount gift card reselling. Most retailers accept gift codes instead of asking the seller/original gift card owner to mail the plastic. Some scammers, though, will try to sell the code then immediately use it after confirmation.

 

How To Avoid Gift Card Scams

Scammers can be so creative and incredibly persuasive that some people end up giving more than just gift card numbers. From personal information, data on family members, to extremely sensitive data like social security numbers. A gift card scam could easily escalate into identity theft. To avoid being victimized by gift card fraudsters, here are some things to keep in mind:

  • No reputable company or government agency would demand payment through gift cards.
  • Never let someone, especially a stranger, listen in to balance checking/confirmation calls.
  • Buy gift cards from reputable sellers only; get discount gift cards from legitimate retailers that offer money-back guarantees.
  • Always inspect before buying. Check for signs of tampering on the package. Check whether the gift card number on the activation receipt matches that on the card itself.
  • Keep your activation receipts, at least until the gift card is redeemed.

If you do fall victim to a gift card scam, immediately report it to the seller or the company that issued the gift card. You can then go to ftc.gov/complaint to file a complaint about the fraud to the FTC.

 

Frequently Asked Questions About Gift Card Scams

How do gift card scams work?

Scammers will typically ask the victim to repeat the gift card number over the phone then immediately utilize it without paying for it. Some scams also include unsolicited emails or calls from unknown phone numbers claiming to be from IRS or tech support of a legitimate company.

Why are gift cards used in scams?

Gift cards that are as good as cash are becoming popular. From being a convenient gift to a business’ free gift cards publicity stunt - this has certainly attracted all sorts of scammers.

How do you avoid gift card scams?

Always be cautious, particularly when buying something from a stranger online. Take note of the caller ID or email addresses that contact you or save text messages regarding payments via gift cards or claims that you have won a free gift card. This will oftentimes make it easier to report scammers. Make sure you only buy gift cards from reputable sellers; always check for any tampering and keep your activation receipt. Use the gift card as soon as possible.

Where can I report gift card scams?

Immediately report to the seller or the company that issued the gift card; then report it at ftc.gov/complaint.

 

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