In recent years, gift cards have become prevalent, and there probably isn’t a person that hasn’t received or bought a gift card. Most of them are also completely anonymous if you buy them with cash in-store.
Of course, scammers and fraudsters know that, and that’s why they have been exploiting the gift card system for many years now.
Here’s everything you need to know about gift card scams.
What is a Gift Card Scam?
Gift card scams are so widespread that 1 in 4 people that lost money to fraud lost money because they gave scammers the numbers on the back of the gift card.
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Scammers typically pretend to be:
- Representatives of the IRS or Social Security
- Tech support from Apple, Google, Microsoft, or other tech company
- Family members or friends
- Utility company agents
- Sellers on Craigslist, FB Marketplace, and others
Scammers will also contact you and tell you that you’ve won a prize or they’re someone you’ve met online on social media or a dating website or app.
They try to pressure you by saying you have to pay right away or something horrible will happen. For example, if you don’t pay them money, you will go to jail for tax fraud, or you won’t get that grand prize.
Once you buy or load a gift card with money, they will ask you to send them the numbers on the front of the card, as well as the PIN. That enables them to spend the money.
There are so many angles to this scam that criminals like to use that it’s almost impossible to list them all here.
For example, scammers like to pose as Google, Apple, or Amazon employees that need “security codes” from the gift card to fix a security issue with your account, or device.
READ ALSO: Can You Transfer Money From Gift Card to Cash App? (Solution)
How to Recognize a Gift Card Scam
NO ONE, no legitimate institution or organization, will ask you to pay them in gift cards. It’s just common sense. However, scammers cast a wide net into which many older and more vulnerable people fall.
They threaten and rush them to go out and buy gift cards while staying on the line and instructing them what to do and how to act if a clerk notices something unusual and starts asking questions.
You also don’t typically have to pay money to receive money from someone. Especially if you’ve won a prize.
If a supposed friend or family member is calling you telling you they’re in trouble and they need some cash urgently, hang up the phone or stop texting and call them on their number to see if that’s true. Even if someone is contacting in their name, or especially then.
Romance scammers will flirt with you for weeks or even months until they ask for money from you. They might even send some money to you first, so you lower your guard.
They make up stories and, according to the FTC’s report, ask for money to:
- Pay for a plane ticket or other travel expenses
- Pay for surgery or other medical expenses
- Pay customs fees to retrieve something
- Pay off gambling debts
- Pay for a visa or other official travel documents
Simply put, you shouldn’t use gift cards as a form of payment. You should use them for their intended use – as gifts. Additionally, always try to verify the identity of the caller or texter.
Once you give over the code from the gift card, the money will most likely be gone before you’re even able to contact someone about it.
Sometimes, scammers don’t even have to contact you to defraud you. They simply go into one of the stores that sell gift cards in person and scratch off the PIN, as well as take note of the gift card code. They then cover the PIN with replacement stickers to make it look like nothing happened.
When they get these codes and PINs, they enter them into an app that tracks the retailer’s website to get notified when someone buys and loads the gift card so they can immediately clean it out.
According to a survey, 1 in 5 people received or gave a gift card that happened to be empty.
Which Gift Cards Are The Most Popular With Scammers?
Scammers love one gift card in particular – the Target gift card. They can be purchased with a preset amount of $10-$200, or you can add a custom value amount between $5-$500.
In the first nine months of 2021, $35 million on Target gift cards were lost to fraud.
The second most popular gift card with scammers was the Google Play card ($17M), then it’s Apple’s card ($16M), eBay’s ($10), and Walmart’s ($6) cards.
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Scammers will typically tell their victims which gift card to buy and will even send them to several stores to make their purchases due to limits on how many cards they can buy.
READ NEXT: 15 Bank Account Scams (How to Easily Avoid Them)
How Much Money do People Typically Lose?
Total losses, along with the total number of gift card scams, are rising every year. In fact, they exploded to over $233 million (reported) in gift card scams in 2021.
Since 2018, median reported losses went from $700 to $1,000. Additionally, the number of people that lost more than $5,000 went from 8% in 2018 to 14% in 2021.
The most popular gift card, the Target gift card, had reported median losses of $2,500. That’s much more than Walmart ($1,380), Apple ($800), eBay ($600), and Google Play ($500).
When it comes to losses of more than $5,000, the percentage of people that lost that much money, or more looks like this:
- Target (30%)
- Apple (13%)
- Walmart (12%)
- Google Play (6%)
- eBay (3%)
What to do if You Were Scammed
If you were scammed and lost money on a gift card(s), or you simply suspect you were scammed, report it to the gift card issuer immediately.
Also, make sure to keep the card itself and the receipt as proof and to give as much information as you can to the company and to law enforcement.
Report it to the Federal Trade Commission (FTC) at ReportFraud.ftc.gov. Do that even if you didn’t pay or lose money. Your report helps law enforcement stop scams.
You should also contact your state attorney general and report the crime, as well as local law enforcement, If you lost money. A police report may help when you deal with the card issuer.
Unfortunately, the vast majority of these scammers are from outside the United States, EU, Australia, the UK, and other similar countries, which makes it much harder to reprehend them and retrieve the money.
The name of the game is prevention.
RELATED: How to Transfer Money from VISA Gift Card to PayPal
Contact Information
To report a gift card scam so the company can try and block the gift card, you can use the following contact information. Make sure to keep the receipt and the gift card. If a company is not on the list below, simply google “company name report gift card scam”.
Walmart
If you think you’ve been the victim of a gift card scam involving Walmart gift cards, report it to (888) 537-5503.
Amazon
If you think you’ve been the victim of a gift card scam involving Amazon gift cards, report it to 1 (888) 280-4331 and follow the instructions.
iTunes
To report a gift card scam involving iTunes gift cards, call Apple support at 1 (800) 275-2273 and say “gift card” to get a live representative.
Google Play
To report a gift card scam if you have a Google account, use this link. If you don’t have an account, fill out this form.
eBay
You can contact eBay here to report a scam. You will have to sign in or make an account first.
Steam
To report a scam to Steam, simply visit their website and fill out a form.
Conclusion
Remember, no legitimate sale or transaction requires you to pay with gift cards. It really is just common sense. However, some people seem to get pressured by scammers, so they can’t think clearly or are afraid of the supposed consequences.
If you’re ever unsure whether something is a scam and the person on the other side is trying to defraud you, asking you to buy gift cards for them is a clear giveaway.
