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It’s a given – if money is involved, scammers are involved. And scammers love gift cards. That’s because gift cards are tough to trace, and not subject to the same regulations as credit and debit cards.
Yet, gift cards are a great way to reward someone, and give the friend, family member, or employee the means to purchase a truly-wanted gift using the pre-loaded monies on the card.
Here’s how to avoid scammers when you buy gift cards.
What Is a Gift Card Scam?
Basically, a gift card scam occurs when someone loads the card with money, and a scammer finds a way to access that money. If you or someone you know is a victim of a gift card scam, the Federal Trade Commission wants to know about it. The FTC reports that gift card scammers account for 26% of fraud reports the agency investigates.
The FTC noted that reports of gift card scams where people have lost money have tripled since 2017. Many times the scam takes place during the holiday season.
How Do Gift Card Scams Work?
There are two main ways that scammers commit fraud using gift cards.
- Someone asks you to put money on a gift card as a way to pay fees, services or bills, such as monies owed to a utility company or government agency.
- Someone finds a way to learn the numbers on your gift card and uses that gift card information to pay for purchases.
What Gift Cards Are Used in Scams?
Any gift card can be hacked by scammers. No company is exempt, although the “heavy hitters” such as Amazon, eBay, and Google are most frequently targeted. Here’s our list:
Most Common Targeted Gift Cards
1. eBay Gift Card – Scammers often sell gift cards on online auction sites. You’ll pay less for those cards, but as the saying goes “You get what you pay for.”
2. Amazon Gift Card
3. Apple Gift Card
4. Google Play Gift Card – The Google play card is a frequent target.
5. Walmart Gift Card
6. Vanilla Gift Card
7. Target Gift Cards
8. iTunes Gift Card – The iTunes card is frequently targeted by scammers who are especially adept at nabbing gift card balances.
Why Are Scammers Attracted to Gift Cards?
Gift cards have become a favorite tool for scammers due to several reasons. While they offer a convenient way to reward others and make purchases, scammers exploit their characteristics for fraudulent activities. The main factors that make gift cards appealing to scammers include:
- Difficulty to Trace: Gift card transactions are challenging to track, making it difficult to trace the flow of funds and identify perpetrators.
- Lack of Regulations: Unlike credit and debit cards, gift cards are not subject to the same regulations, offering scammers more leeway to exploit them without facing immediate legal consequences.
- Anonymity: Scammers can use gift cards anonymously, as they don’t require personal identification like credit cards. This anonymity makes it harder to identify and apprehend the individuals behind the scams.
- Ease of Use: Gift cards are easily accessible and can be purchased from various retailers, making them a convenient tool for scammers to manipulate victims.
- Gateway to Identity Theft: Scammers can use gift card scams to not only steal money but also gather personal information, leading to potential identity theft.
- Limited Recovery Options: Unlike credit or debit card disputes, recovering funds lost to gift card scams is complex and often unsuccessful, making them an attractive option for scammers.
| Factors That Attract Scammers to Gift Cards | Reasons |
|---|---|
| Difficulty to Trace | Challenging to track transactions, aiding anonymity |
| Lack of Regulations | Less regulated, allowing exploitation |
| Anonymity | Can be used without personal identification |
| Ease of Use | Easily accessible and manipulated |
| Gateway to Identity Theft | Can lead to stealing personal information |
| Limited Recovery Options | Complex recovery process, favorable for scammers |
Due to these factors, it’s crucial for individuals to stay informed and vigilant to protect themselves from falling victim to gift card scams.
How to Avoid Gift Card Scams and Gift Card Fraud
As we stated, gift cards are an awesome way to give a gift. Here’s how to continue to use them, while being aware of our cautionary tips:
1. Government Agencies and Gift Card Scams
Be aware that government agencies like the IRS or the Social Security Administration will never request gift card payments for owed amounts.
- Direct Contact: If in doubt, contact the agency directly.
- No Gift Cards for Payments: Understand that legitimate government agencies do not accept gift cards as payment.
2. Utility Company Scams
Exercise caution with unexpected communications from utility companies demanding gift card payments.
- Direct Verification: Contact the utility company directly to verify any outstanding bills.
- Recognize Scam Signs: Understand that real utility companies do not ask for gift card payments.
3. In-Store Gift Card Purchase Safety
When buying gift cards from a store display, check for tampering, especially with the card’s PIN.
- Inspect Cards Carefully: Ensure the PIN has not been scratched off.
- Avoid Compromised Cards: Be wary of cards that may have been scanned or tampered with by scammers.
4. Cashier Scams During Gift Card Loading
Watch out for scams during the gift card loading process at retail stores.
- Monitor Activation Process: Ensure the card being activated is the same one you purchased.
- Verify Before Leaving: Check the card’s balance after loading to confirm the correct amount is added.
5. Protect Your Gift Card Information
Do not share your gift card numbers with unknown individuals.
- Safe Redemption: Redeem gift cards only at the time of purchase from official stores or websites.
- Guard Your Information: Keep gift card details confidential and secure.
6. Reporting Gift Card Fraud
Report any instances of gift card fraud to the appropriate authorities.
- Contact the FTC: Inform the Federal Trade Commission about fraud cases.
- File a Police Report: Make an official report for any fraudulent activity.
7. Prompt Usage of Gift Cards
Use gift cards quickly to minimize the risk of fraud or expiration.
- Redeem Early: Try to use gift cards within the first nine months of receipt.
8. Avoiding Online Gift Card Purchases from Unofficial Sources
Steer clear of buying gift cards from auction sites or unverified online marketplaces.
- Beware of Online Auctions: Sites like eBay or Facebook Marketplace can be rife with gift card scams.
- Purchase from Authorized Sellers: Buy gift cards directly from official retailers or their approved vendors.
9. Email and Phone Call Scams
Be skeptical of emails or calls claiming you’ve won a prize, especially if they request gift card details.
- Don’t Trust Unsolicited Wins: Disregard emails or calls about unexpected prizes or winnings.
- Protect Against Malware: Avoid clicking on links in suspicious emails or messages to prevent malware and identity theft.
10. Verify Gift Card Balances Immediately
Always check the balance of a gift card as soon as you receive it. This helps in confirming that the amount is accurate and the card is valid.
- Use Official Websites: Check balances through the retailer’s official website or customer service.
- Keep Receipts: Hold onto the purchase receipts, which often include the card balance.
11. Scrutinize Pre-Owned Gift Cards
Exercise caution when purchasing pre-owned gift cards. Verify their legitimacy and ensure they haven’t been tampered with.
- Buy from Reputable Sources: Prefer recognized retailers or trusted resell platforms.
- Check Expiry Dates and Fees: Confirm no hidden fees or imminent expiration dates are associated.
12. Educate Yourself and Others
Stay informed about common gift card scams and educate your friends and family, especially those who may be more vulnerable.
- Keep Up With Scam Trends: Stay updated on the latest scam techniques.
- Spread Awareness: Share information with others to prevent them from falling victim.
13. Secure Physical Gift Cards
If you’re keeping physical gift cards, store them securely, as you would cash or credit cards.
- Safe Storage: Keep gift cards in a secure location, away from potential theft.
- Treat as Cash: Be mindful that gift cards are as valuable as cash and should be protected similarly.
14. Be Wary of High-Pressure Tactics
Scammers often use urgency or high-pressure tactics to push for quick decisions. Be suspicious of any communication that demands immediate action.
- Don’t Rush: Take your time to assess the situation.
- Verify Independently: Contact the relevant company or agency through official channels.
15. Avoid Sharing Personal Information
Never share personal or financial information when dealing with gift card transactions.
- Keep Details Private: Personal details should not be disclosed in the context of gift card usage.
- Secure Online Transactions: Ensure online transactions are done through secure and encrypted connections.
16. Use Credit Cards for Purchases
When buying gift cards, use credit cards that offer fraud protection. This adds an extra layer of security.
- Fraud Protection: Credit cards often provide additional safeguards against fraudulent activities.
- Track Spending: Credit card statements can help track and verify gift card purchases.
By following these tips, you can significantly reduce the risk of falling victim to gift card scams and ensure a safe and enjoyable gift-giving experience.
Frequently Asked Questions (FAQs)
What is a gift card scam and why are scammers attracted to gift cards?
A gift card scam occurs when someone loads a gift card with money, and scammers find a way to access that money. Scammers are drawn to gift cards due to their difficulty to trace, lack of regulations, anonymity, ease of use, and potential for identity theft. They exploit these characteristics to carry out fraudulent activities with minimal risk of detection.
How do gift card scams work?
Scammers commit fraud using gift cards in two main ways. First, they manipulate victims into loading money onto a card as payment for fees or bills that are often non-existent. Second, scammers obtain gift card numbers through various means and use these numbers to make unauthorized purchases before the victim realizes the card has been compromised.
Which gift cards are commonly targeted by scammers?
While any gift card can be hacked, scammers frequently target popular brands like eBay, Amazon, Apple, Google Play, Walmart, Vanilla, Target, and iTunes. These brands’ widespread use and familiarity make them convenient tools for scammers to exploit.
How can I avoid falling victim to gift card scams and fraud?
To protect yourself:
-
- Never use gift cards as payment to government agencies or companies.
- Verify payment requests through official channels before taking any action.
- Exercise caution when purchasing gift cards, especially from store displays that may have been compromised.
- Safeguard the card’s PIN by ensuring it remains hidden and unscratched.
- Report instances of fraud to the Federal Trade Commission (FTC) and file a police report.
- Use gift cards promptly after receiving them to reduce the window of opportunity for scammers.
- Avoid purchasing gift cards from online auction sites, where scams are common.
- Be skeptical of unsolicited emails or calls that claim you’ve won prizes, as they may be scam attempts.
Can gift card scams be traced?
Unfortunately, gift card scams are difficult to trace due to their inherent characteristics, such as anonymity and limited transaction visibility. This makes them an attractive tool for scammers looking to exploit vulnerabilities in the payment system.
Can I recover money lost to gift card scams?
Recovering money lost to gift card scams is challenging, as it lacks the same level of protection and dispute resolution as credit or debit card transactions. While some victims have managed to reclaim funds from platforms like Amazon, success is not guaranteed. Reporting the theft to the FTC, local law enforcement, and the issuing store or company is crucial.
How can I protect myself from gift card scams?
Protect yourself by staying vigilant and informed about common scam tactics. Stay cautious when sharing personal or financial information and adhere to the provided tips to minimize your risk of falling victim to gift card scams. Educating yourself and others about these scams is key to prevention.
Conclusion: Safeguarding Your Finances and Identity from Gift Card Scams
In a world where scammers seize every opportunity to exploit unsuspecting victims, it’s crucial to stay informed and vigilant. Gift cards, while a convenient and thoughtful way to give and receive, have unfortunately become a favored tool for scammers. The allure of anonymity, ease of use, and the potential for untraceable financial gain make them an attractive option for those looking to deceive.
As gift card scams continue to evolve, the responsibility lies with each individual to protect themselves and their loved ones from falling victim to such fraudulent activities. By understanding the common tactics scammers employ, recognizing the warning signs, and taking proactive measures, you can significantly reduce your risk of becoming a victim.
Educate yourself about the red flags of potential scams, such as unsolicited requests for gift card payments or prizes, and always verify the legitimacy of such claims through official channels. Be cautious when purchasing gift cards, especially from open displays, and keep the card’s PIN hidden and unscratched to thwart potential theft.
In cases where you suspect or experience a gift card scam, swift action is essential. Report any instances of fraud to the Federal Trade Commission (FTC) and file a police report to help authorities track down and apprehend scammers. While recovering lost funds from gift card scams may be challenging, your diligence in reporting the incident can contribute to ongoing efforts to combat such illicit activities.
Remember, while gift cards can bring joy and convenience, they can also be exploited by scammers seeking financial gain and personal information. By staying informed, cautious, and proactive, you can safeguard your finances and identity from the dangers of gift card scams, ensuring that the act of giving remains a positive experience for all parties involved.
Image: Envato
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