Gift cards are always a good go-to gift for the holidays, especially if you choose the type of card that the recipient might enjoy according to their lifestyle, shopping, dining, crafting, home goods, home repair, etc. And now with the complexities of the recent global supply chain disaster making it tough to get ahold of electronics and others items, in comes the go-to opportunity for scammers as people turn more to gift cards.
According to the FTC, there were nearly 40,000 fraud reports for gift or reload cards in the first nine months of 2021—compared to 44,000 for all of 2018. And the numbers have been going up every year since. (A reload card is like a prepaid debit card that you can add money to.)
What's so special about this past year? Experts predict that based on the nine-month numbers, 2021 may be the worst year yet. And if you received any gift cards over the holidays, January may be the time that you start using them. Plus, the pandemic broadens fraud opportunities for criminals.
Here's how it works
A typical gift card scam can occur when a scammer contacts you via phone, text or email urgently asking for money and to pay with gift cards. They may say your relative is in jail or that you owe the government money. Once they have the card number and PIN, they have your money.
There are many different types to be aware of. Following are a few of the more prevalent ones:
Threats by the IRS.
If you are ever called, texted or emailed from the IRS about unpaid taxes, this is a scam. The IRS will never contact you unless by letter. They will also not threaten to jail you or request that you pay taxes via gift cards.
Sometimes the cashier will pull a switcheroo at the register, activating the card, but giving you back an inactivated one. Avoid this scam by watching cashiers checking you out and be sure they give you the card back immediately after activating.
Magstripe card crime has always been a scammers dream. In this scam, they grab cards from retail stores, swipe them for the numbers, and return them to the shelves. Next, the scammer calls customer service with numbers on the stolen cards and asks what the balance is, assuming they have been purchased. The scammer can then uses the gift card number to make online purchases. To avoid this situation, make sure the protective stickers are on the card and that they do not appear to have been tampered with
Free Gift Cards.
Everyone likes a freebie, especially around the holidays. But scammers know this and will steal your information through phishing emails and pop-up ads offering gift cards. Don't click on suspect ads, and if you receive an email that looks suspicious, mark it as spam or delete it. Also, if the e-mail requests that you provide personal information like account numbers, login credentials, or your Social Security Number to receive a free gift card, it's a scam.
Utility Phone Calls.
If someone calls to say your electric account is delinquent and will be shut off unless you pay with gift cards—hang up. This is a scam. Even if you are behind in payments, legitimate companies will send you a letter and NEVER ask for payment in gift cards. If you comply, they will simply use your gift cards for a shopping spree.
Phishing, Vishing and Smishing.
These tried-and-true scams don't take a vacation at the holidays; rather, they might take on a more “festive” tone. It could come in the form of a phone call, text or holiday email sales promotion from a favorite store or brand with a too-good-to-be-true offer. To recognize an offer from a secure site, check for proper spelling and grammar. Review the site's URL and look for a green lock symbol and an HTTPS in the website address.
The Fake Prize.
Scammers will often sell gift cards that haven't been activated. You might be lured in because it's priced for less than face value—but later find that the gift card doesn't work. Avoid this by never buying gift cards on an auction site. Gift cards are best bought from the retailer.
What to do if you are a victim of the Gift Card scam.
- Report it to the FTC.
- Report it to your state attorney general.
- If you lost money, also report it to local law enforcement. A police report might help when you deal with the card issuer.
- For any of the major gift card companies—like Amazon, EBay, Google Play or iTunes— be sure to hold onto the card and the receipt. Then contact customer service at any of these and other companies to put a freeze on the card.
Be cautious of solicitors and organizations during this time of cheer, and keep an eye out for your friends and family too. Use the above tips to help you avoid fraud and identity theft, no matter what the season.
Resources: Federal Trade Commission, Norton, Money Talks News, NBC News
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