How to Avoid the Most Common Gift Card Scams

Gift cards seem like the perfect stocking stuffer for anyone, don't they? Although this is an easy option to choose, it has many hidden risks. Gift card fraud schemes are rampant, especially around the holidays.

Issues surrounding fake gift cards and other scams have become so pronounced, governments are acting. The legislature in Maryland, for example, just passed a bill tightening security around gift cards to limit this sort of customer issue. 

Despite these efforts, we can expect new gift card scams to pop up, and consumers need to protect themselves. Here’s how to avoid gift card scams in our modern shopping world.

Key Insights:

• Gift card scams are one of the more common forms of phishing or fraudulent online scams.
• According to a holiday shopping survey,only 55.6% of customers have never been scammed while shopping. 
• If you fall victim to a gift card scam, you should report the scam, but most customers are not reimbursed. Your best bet is to avoid scams in the first place.

What Are Gift Card Scams and How Do They Work?

There are several types of gift card scams. Reports of various consumer issues with scams range from fake family emergencies to gift card draining before you’ve even purchased the card in the first place. There are two primary categories for gift card scams.

• Forced purchasing of gift cards: There are many scenarios where a scammer tries to force or coerce a victim into buying a gift card and sharing the details online or over the phone. Whether you received a call from a “government” or some online suitor, the Federal Trade Commission has issued a gift card scam warning that states “No real business or government agency will ever tell you to buy a gift card to pay them.” 
• Gift card draining: Gift card draining occurs when someone locates a gift card’s number and security code. The scammer then reseals the card, so that customers won’t notice it’s been compromised. Later, when a customer buys the card and loads it with payment, the scammer has access to the funds and uses them before the customer can. The card is drained before it can be gifted or used. 

Common Gift Card Scams

Gift card scammers use sophisticated tricks to convince customers they need to pay immediately. Here are some key gift card scams.

Family emergency scam

Scammers try to persuade you that a loved one is in trouble, even using voice cloning to trick you. Also, hackers may use stolen emails or social media accounts to send messages claiming to be from friends or family pushing you to purchase an exact gift card and provide them with the required details.

In one scenario, a woman was told by a scammer posing as a family member to contact an agency where she wound up buying $1000 in Google Play cards. Not only did she lose the $1000 to scammers, but she also lost a lawsuit against Google as well when the judge decided Google was not responsible for reimbursing her for the scammed amount.

Warning signs:

• They ask you to pay straight away. 
• They demand you don’t tell anyone.

Gift cards on Facebook Marketplace

Among the various Facebook scams, discount gift cards are an easy one to spot. In this scam, the fraudster offers to sell gift cards for less than their nominal value. For example, in this Facebook Marketplace post, the scammer offered $25 Xbox gift cards for $20 each. Customers buy the cards and then discover they have no value – they are stolen or already spent. 

Source: facebook.com

Warning Signs:

• Buying and selling gift cards through Facebook or another unmonitored marketplace.
• Paying less than the full value of a card from an unknown individual.

Physical gift card scams

Buying a gift card in a store? Be cautious. Some scammers gather gift card information including a number and pin and put them back on shelves. Unsuspecting shoppers buy the card and load it, but scammers spend the funds faster than you could even use it.

Another physical card scam involves fake barcodes. Scammers put fake information on gift cards, so that customers think they are buying and loading one card, while they actually are loading a card held by the scammer. For example, in the review #5358085 costumer shared that Apple gift card that they purchased was invalid. 

Warning signs:

• Barcodes are slightly raised as a sticker covers the original printed code.
• The packaging of a gift card appears to be tampered with, even minimally. 

Government scams

Scammers may pretend to be with the IRS or other government bodies. An official institution won’t ever ask you to use a gift card or call you unless you specifically request them. Beware and ask for their official names. It would be beneficial if you hung up and called the official number you know or can find on the website.

Warning signs:

• You’re asked to pay taxes or fines with a gift card.
• An immediate demand for payment is made.

Workplace scams

You may receive a message from your so-called colleagues, managers, or boss asking you to buy gift cards for them and send their photos. Another option is a call from tech support claiming that you have specific issues with the computer and they need access to it. Once they have access, they can steal your data or ask you to pay for their service with a gift card. No tech support or utility company will ask you to do so. 

That's exactly what happened to one Reddit user who received a message from their “boss” asking them to buy some gift cards. The user suspected something was wrong only after spending over $2000.

Source: reddit.com

Warning signs:

• A threat to cut off your utilities if you don’t pay straight away.
• A request for remote access to your PC.

Gift card scams over the phone

You receive a phone call, or a warning pop-up on the computer, instructing you to call a specific number about an emergency financial situation. Once you call the number or answer the phone call, the scammer conveys terrible news about your finances and encourages you to buy gift cards to protect your funds. Naturally, then the scammer asks you for the card number and pin and steals the funds.

Online reviews about these situations explain how easy it is to fall for a scam like this, even with safeguards in place. A 70-year-old woman was tricked into withdrawing her funds and buying about $24,000 worth of gift cards. Despite being stopped and warned about her choices by both bank and store employees, she proceeded with the purchase and ultimately became the victim of a substantial scam. 

Warning signs:

• You are asked to call about your bank accounts. If this happens, hang up and call the official number for your bank to avoid fake scam phone numbers. 
• You can’t solve financial problems at your bank by buying gift cards. 

Prize scams

You get a call from a scammer claiming that you’ve won a prize but you need to pay some fees first if you want to get it. The prize may be anything, from a phone or a car to a holiday trip or cruise. 

Warning signs:

• If you haven’t used this company before, it’s probably a fake prize. 
• No company will ask you to pay fees with a gift card. 

Tips To Avoid Gift Card Scams

Try to prevent gift card fraud by purchasing from trusted stores you have shopped at before. Use these steps so as not to fall victim to fraudsters.

Avoid purchasing cards with easy public access 

If you need to buy a card in a store, choose those kept behind the corner and with limited access by visitors. Finding a card in a sealed package is another option to protect yourself from falling victim. The reason is that it is challenging to read numbers and PINs in such cases. 

Activate the card in person

When you activate your card, you can verify its legitimacy and quickly solve any issues related to the activation process or discrepancies. In-person activation also allows you to learn better about the card’s terms. So, ensure you have more physical control over the card to steer clear of gift card scammers. 

Change the security code

When you receive the card as a present, don’t hesitate to register it and change the PIN. If you are still afraid of being scammed, use finances as soon as possible. 

Report gift card scams to the FTC

The FTC urges those who have been scammed to share their consumer experience with the agency through an online form to report the gift card scams and be advised on strategies after being scammed. If you’ve been scammed or barely avoided being scammed with gift cards, also consider writing a review to warn other shoppers about the experience.

How to Contact Gift Card Companies

Report any fraud to the company to minimize loss. Keep your receipt and your card as proof.