How To Spot and Avoid Gift Card Scams

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‘Tis the season for gift cards. With the holidays approaching, it’s a good time to be on the watch for gift card scams.

Think it can’t happen to you? About one in four people who reported fraud to the Federal Trade Commission (FTC) and specified a payment method said they were using a gift card.

In this article, I’ll give you information on how to spot a gift card scam and tell you about the most common scams out there. I’ll also offer some tips on how to use gift cards safely.

How To Spot Gift Card Scams

Criminals have found several different ways to manipulate gift cards — and the people who use them. So to spot a gift card scam, you need to be aware of things about the cards themselves but also about your own behavior when using the cards.

Scam #1: Gift Card Purchases

You see gift card kiosks in many big stores these days. Since anyone can pull a card off the rack, be extra careful when choosing one. Examine the gift card and its packaging to make sure it hasn’t been opened or tampered with.

If you can see the back of the card without opening the package, check to make sure the foil hasn’t already been scratched off.

Checking a gift card before you buy it is an easy red flag to spot.

But the others involve people — not the cards.

Scam #2: Gift Card Payments

One of the most common red flags is another person asking you to use a gift card in a way you usually wouldn’t.

These crooks often pose as:

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  • IRS agents or those with another government agency
  • Bill collectors
  • Tech support professionals

Once you’ve purchased the gift card, the crook will typically ask you for the PIN on the back. If you give it to them, they’ll access the money and leave you without any of it.

But there are other ways. Be leery if:

  • Someone asks you to use a gift card to pay a fee or some other charge or “bill” that person says you owe.
  • Someone tells you you’ve won a monetary prize and are asked to use a gift card to pay for “processing” or “shipping and handling” charges.

Common Gift Card Scams

Lori Silverman, who manages Clark’s Consumer Action Center, says they receive plenty of calls about gift card scams.

Although this is by no means an exhaustive list, Team Clark has written about gift card scams featuring the following retailers:

  • Aldi: Fake coupons circulating online claim to offer $75 gift cards.
  • Amazon: Callers who say you need to give them a code from a virtual gift card to cancel an Amazon Prime membership you don’t think you have.
  • eBay: Criminals have been known to put vehicles up for sale and ask to be paid via eBay gift cards.
  • Target: Look out for phony mailers offering $100 gift cards you can use in the store.
  • Walmart: Just like the Target ruse, promotional flyers may be sent to your mailbox. They tell you to call a number found on the mailer and answer a few “research” questions. 

Here Are Some Tips for Buying and Using Gift Cards

If you choose to buy and use gift cards, here are some safe ways to do it:

  • Always inspect the gift card first: Before you buy, pay particular attention to whether the back of the gift card has been scratched off, which means it’s likely been used already.
  • Use them fast: Money expert Clark Howard wants you to use store and restaurant gift cards quickly because they can become worthless if the business fails. “The restaurant and retail industries are unstable. Don’t let a gift card sit and gather dust,” he says.
  • Turn them into cash: Several websites allow you to trade, sell and buy gift cards in a secondary market. Read our guide on how to turn your gift cards into cash.

Final Thoughts

The FTC says on its website:

“Gift cards are for gifts, not payments. Anyone who demands payment by gift card is always a scammer.”

Remember, if someone you don’t know calls you asking for money, do not send it — even if you think it could be someone you know. Always hang up and call them back directly to confirm their identity.

You can report gift card scams by contacting the card issuer. This FTC article contains a list of companies.

You can also report the gift card scam to ReportFraud.ftc.gov.

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