Gift card fraud rises during the holidays every year. So many of us love buying and using gift cards as gifts. They are practical, simple to purchase, simple to use, and simple to give as gifts. They typically let the recipient choose exactly what they want, and they are frequently given as rewards for actions.
According to estimates, the market for gift cards is worth hundreds of BILLIONS of dollars. Nobody dislikes receiving a free gift card, right? BUT, gift cards are unfortunately frequently used by con artists to defraud their victims of money.
There are many ways gift cards can be used by scammers, here are the top three, as noted by KnowBe4:
You Have to Use Gift Cards to Pay a Bill
One very typical scam involves a potential victim being contacted by someone, usually via voice call (although it can also be done via text message or email), and being informed that either their regular payment to a reliable service has been declined or that there is a new emergency charge. A good illustration of the former is when a con artist calls pretending to be the victim’s electric company. They will claim that the victim’s regular electricity payment was rejected and that unless they visit a store and pay the bill with gift cards, their electricity will be turned off in a matter of hours. Who would use gift cards to pay their electricity bill? You would be shocked. A who’s who of medical professionals, attorneys, and even law enforcement. People who previously thought they were too savvy to get scammed are often on the victim list.
A good illustration of the latter scam is when a caller pretends to be from the IRS or law enforcement and informs the victim that they owe an unpaid fine and that they will be arrested if they don’t pay right away. Who would think that the police or the IRS would take gift cards as payment for a fine? Once more, a higher proportion than you might guess.
How can you avoid this scam?
There is a very high chance that a request for an emergency payment is fraudulent, especially if it involves gift cards. If the caller is willing to provide their contact information, you can take it. If you ask them for their contact information, they typically hang up the phone immediately. In either case, get in touch with the company. Using a known phone number or email address and inquire about how to confirm the request’s legitimacy. The legitimate company will put you in touch with their billing department so you can confirm the request and pay the bill if it is genuine.
Gift Cards That Have Been Maliciously Modified in Stores
In this scheme, thieves steal department store gift cards, discover their personal PIN numbers, and then put them back on the shelves where a victim will find them. The fraudster can frequently spend the value of the gift card faster than the victim when the victim purchases the previously tampered with card and activates it. To find out when the gift card is activated and how much money is still on it, the fraudster can repeatedly call the store’s gift card number.
How can you avoid this scam?
When you purchase a gift card, check to see if it has been tampered with in any way. Choose gift cards from the bottom of the stack; this is not foolproof but may help. Most major retailers who use gift cards are aware of these scams, and many will you to guard against them. Some of them may even offer to reimburse you if you lose money.
“Win a free gift Card!”
This is a huge scam, particularly during the holidays. It’s a common gimmick to offer “Win a free $100 Amazon Gift Card!” Either you are required to download and run a file to “transfer” the gift card to you, or they will request personally identifiable information from you, such as your social security number or bank account information. There are thousands of legitimate circumstances where anyone can win a free gift card, which makes this particular phishing scam effective.
These scams can be easy to recognize because, despite the fact that they purport to be from a well-known, reputable company, the gift card URL, phone number, or email address is not from that company. Instead, they appear at random in emails or texts. But, again, this can be challenging because many trustworthy businesses hire outside contractors to handle their real free gift card distribution. It’s possible that the URLs, phone numbers, and email addresses you see don’t correspond to the actual, legitimate vendors.
When the offer is simply too good to be true, it more than likely is.
There are tons Gift Card Frauds During the Holidays. It’s typically a scam if someone contacts you and demands that you use a gift card to pay a bill. Simply ignore them if you can’t positively, unquestionably confirm that the gift card reward or request is legitimate or that a card hasn’t been tampered with. A $100 gift card is not worth the risk of losing your bank account and personal information.
Here is some guidance from the FTC regarding gift card fraud.