Credit Sesame discusses how to spot a gift card scam.
Of the many signs of being scammed, one that should immediately set off a red flag and alarm bells is if you’re asked to pay with a gift card.
Gift cards are gifts. They are not for paying strangers, no matter how convincing their arguments.
Gift cards may be a good fallback Christmas gift for teenagers or anyone hard to buy for. But even if it looks like your niece is emailing you and asking for a gift card at Apple, Amazon or other retailer, you should double-check that it’s really her.
The Federal Trade Commission is adamant about it, telling consumers that anyone who demands to be paid with a gift card is a scammer. No honest business or agency ever asks you to pay using a gift card.
What a gift card scam is
The scam often starts with a caller telling you money is needed urgently to prevent something terrible from happening. They may say a relative is in jail, your power is turned off, or there is a deadline to claim a prize that first requires paying a fee.
The point is to pressure you to act quickly without thinking about the request much or checking with someone you trust.
The caller may tell you which gift card to buy and may send you to a specific store. They may tell you to buy cards at several stores so that cashiers won’t get suspicious. The caller might stay on the phone with you while you go to the store so that you do not call anyone else about this odd request.
While buying gift cards is common during Christmas, scammers may coach you on what to say if a cashier who thinks your purchase is odd asks questions. Store employees may be suspicious and want to help, but scammers know this and try to prepare you with answers that are plausible.
After you have purchased the cards, the crook asks for the card number and PIN on the back of the card. This allows them to get the money loaded onto the card and use it at the store tied to the card.
Common gift card scams
You can spot a gift card scam even before the scammer asks you to buy a gift card. Here are some common scams that often start with an email or phone call to you:
- You receive a call apparently from the government, such as the IRS or Social Security Administration. The caller says you owe taxes or a fine, and a gift card is an easy way to pay.
- An unexpected tech support from Apple, Microsoft or another company tells you that something’s wrong with your computer and you must pay them to fix it.
- Someone you met on a dating website asks for your help and wants you to send them gift cards.
- You get the good news that you have won a prize but must first pay fees or other charges with a gift card.
- A caller claiming to be from your power company or another utility company threatens to cut off your service if you don’t pay immediately.
- You get a check in the mail for way more than you expected, and the person who sent it to you tells you to deposit the check and give them the difference on a gift card. The check is fake.
Why scammers ask for gift cards
Gift cards are popular with scammers because they provide quick cash, the transaction is largely irreversible, and they can remain anonymous.
From January 2018 through September 2021, 26% of consumers who reported losing money to fraud indicated the money was taken using gift cards or reload cards, according to the FTC. Some scammers ask for specific gift cards, just like a teen might do. The most common gift card where money was reported lost to scammers was on a Target gift card, followed by Google Play, Apple, eBay, and Walmart cards.
Gift cards can be bought easily and provide instant funds without setting off any alerts, as wire transfers can. The cards aren’t tied to an account or person, so they don’t have the same restrictions as credit and debit cards do, and can’t be traced.
Once they get the gift card number and PIN, they can buy expensive merchandise that’s resold, or they can trade the card value for cash or cryptocurrency.
What to do to avoid a gift card scam
If someone asks you to pay them with gift cards, hang up on the caller or don’t answer their email.
You can report it to your local police department, state attorney general, or online to the FTC. Even if you didn’t pay, your report helps law enforcement stop scams.
If you suspect that you gave gift card information to a scammer, keep the card and your receipt and report it to the card issuer immediately. If money is still on the card, the company may be able to refund your money.
Apple, for example, recommends calling Apple Support right away (1-800-275-2273) and saying “gift card” to connect with a live representative if you think you’ve given an iTunes or other Apple gift card to a scammer. Apple can put a freeze on the card, and you might be able to get your money back.
Apple gift cards can only be used to buy Apple products and services. If you’re approached to use the cards for any other payment, Apple says you’re likely the target of a scam and should report it to your local police department and the FTC.
Buying gift cards safely
Consumers should also be careful when buying gift cards to be used as gifts. The FTC recommends not buying from online auction sites because the cards may be fake or stolen. Instead, buy cards from stores you know and trust.
Check that the protective stickers are still on the card and that they don’t appear to be tampered with. The PIN on the back should not be showing.
Keep your receipt, which contains the card’s ID number that can help if you and need to report the gift card as lost.
Consumers who found How to Spot a Gift Card Scam useful may also enjoy:
- Pay Down Debt as a Financial Gift to Yourself
- 9 Questions to Ask Before You Lend Money to a Friend
- How to Avoid Scams When Selling Online
Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.
