Gift Card Scams: What They Are and How to Avoid Them
Your credit card isn't the only item in your wallet that scammers love. Watch out for these gift card scams that could put you and your money at risk.
If you plan to purchase a gift card this holiday season, beware: Scammers are now using them to swipe your money. A study by the Better Business Bureau (BBB) found that gift card scams nearly tripled between 2017 and 2020, making them the second-highest fraud type behind credit cards.
As with the wide range of phone scams and online scams, from Amazon scams (including specific Amazon email scams) to Cash App scams and even brushing scams, scammers’ tricks are getting more convincing by the day. “Perpetrators prey on their victims by exploiting our tendency to trust people,” says Randy Pargman, vice president of counterintelligence at Binary Defense, a cybersecurity company. These scams can also do serious damage to your wallet. The BBB reports that consumers lost a total of $245 million to fraudsters since 2017 thanks to gift card scams.
That said, you shouldn’t avoid gift cards altogether just because of the rising numbers of scams. “There are so many different types of gift card scams,” says Eva Velasquez, president and CEO of the Identity Theft Resource Center. “However, as long as you do your homework and are educated on these types of scams, you should be able to spot one.”
So, what do gift card scams look like, and how can you avoid them? We got the scoop from experts in tech security so your holiday season is as merry as it should be.
What is a gift card scam?
There are two types of gift card scams, according to experts. The first involves trying to trick you into paying an impostor with gift cards. You may receive a phone call or text message from someone claiming to be the police, IRS, or government official, demanding that you pay a fee or debt by purchasing gift cards and sending them the information on the back. In the second type of scam, fraudsters will sell you fake gift cards at discounted prices online. Although buying gift cards used instead of new can save you money, consumers should keep a close eye out for gift card scams and other common shopping scams on person-to-person sales sites like Facebook Marketplace and eBay.
How do gift card scams make money?
In most cases, scammers who convince you to send them gift card numbers will immediately use the cards to buy items or resell the cards to someone else. Buying a stolen or fraudulent gift card online, on the other hand, delivers money straight to the criminal’s bank account. “Quite often the seller had very little cost to obtain the gift card that they sold you, so most or all of the money you pay for the gift card is pure illicit profit,” Pargman says. That’s why you should never purchase a discounted gift card from a private seller you don’t know (or fall for these other sneaky “deals” that are actually money scams).
What does a gift card scam look or sound like?
Urgency from a caller asking you to buy a gift card should be a red flag. Scammers will “try to convince you that you have to act urgently or dire consequences will occur,” according to Pargman. Meanwhile, gift card scams that try to sell you fake gift cards often look like deals that are too good to be true, such as a $100 gift card on sale for $50. “It’s best to pass up these offers and not get left holding a worthless card, or worse—giving it as a gift to a loved one who finds out later that it is worthless,” says Pargman.
What to do if you’re a victim of a gift card scam
Unfortunately, you might not be able to recoup your lost money if you fall victim to a gift card scam. “Unlike a credit card, you cannot dispute a charge, and there is no guarantee the retailer will refund or return your money even if you make a fraud complaint,” Velasquez says. She recommends contacting the company you bought the gift card from to cancel the card, as well as calling the Identity Theft Resource Center to speak with an expert advisor. You should also report the theft to law enforcement and the Federal Trade Commission (FTC) so they can track down the scammer.
How to avoid gift card scams
To protect yourself from gift card scams in the future, Pargman suggests ignoring calls or texts from anyone demanding that you pay for a fee, fine, or other debt with gift cards. “No police, IRS, or any government official will ever ask for payment in gift cards,” he says. Buying gift cards for friends and family? Velasquez recommends sticking to reputable stores and checking the cards for any signs of tampering (like the PIN number showing on the back) before purchasing them. FYI, you should also ignore calls from any of these scam phone number area codes—they could be phony car extended warranty calls.
Next, read up on what doxxing is and how it can set you up to be hacked.
- Better Business Bureau: “BBB Study: Gift cards are an increasingly popular tool for scammers”
- Randy Pargman, Vice President of Threat Hunting and Counterintelligence at Binary Defense
- Eva Velasquez, President and CEO of the Identity Theft Resource Center