Gift Cards Are Gifts: Not Financial Transactions

 For holidays, birthdays and other special occasions, gift cards are given as a token of celebration or gratitude. While these gifts may seem harmless, they are actually at the center of deception for fraudsters.

It’s not uncommon that social influencers and well-known organizations offer gift cards as a reward for social contests or promotions. For senders, this transaction gives them a sense of trust in exchanging money to the recipients. Compared to exchanging cash, gift cards are a safer and simple way to give money to friends and strangers.

Because gift cards are a form of cash, the cash associated with the card is nearly irreplaceable. Scammers believe they can strike gold since victims trust the idea of gifting or receiving a gift card.

Gift card scams can take on several forms.

 According to the Federal Trade Commission (FTC), gift card fraud typically takes place over the phone, but can be schemed on any communication platform.

To help potential victims, the FTC outlines numerous situations to be mindful of:   

• An alleged company or social influencer will contact a victim to let them know that they have won a contest or prize. In order to receive the prize, a payment for shipment and other fees must be collected.
•  A caller claims to be a government official from the IRS or the Social Security Administration and will ask to pay taxes or a recent fine through a gift card rather than a credit card number.
• Fraudsters may call impersonating tech support from a major company and explain something is wrong with a piece of technology. In order for something to be fixed, a gift card payment must be used.
• A recent connection via a dating app or website may ask for financial help through gift cards. Victims will be asked to read the serial numbers on the back of gift cards to transfer the money.
• A scammer may impersonate a close friend or family member explaining there has been an emergency situation and to send money right away, even if that means collecting money on gift cards at hand.
• Victims may receive a check with an amount that was more than what was expected. The sender will ask victims to deposit the check and send back the difference on a gift card before depositing the check. During these situations, the checks will most likely bounce, and victims lose more money than expected.

While gift card fraud can look and feel different, all scams end up the same: the victim always loses more than expected. Victims should always be mindful of the demands of unknown callers. If ever in doubt, remember these three points when it comes to avoiding gift card scams:

• Purchase gift cards through a reliable source, such as the store itself.
• Double check the back of the card to ensure the pin has not been previously scratched off.
• Hold onto the receipt until the gift card is used entirely.

Gift card scams are not uncommon. If you or someone you know has been a victim, immediately contact the company that issued the gift card and report your story to the FTC or contact your state’s Attorney General.