Gift card frauds are on the rise and could be happening right in front of you at the checkout.
According to a report by the Federal Trade Commission (FTC), nearly 40,000 people reported losing $148 Million in gift card scams during the first nine months. This is more than was reported for 2020 and could be just a fraction of the problem, as less than 5% gift card scam victims report it.
Here’s how you can get a gift card scam. You receive a call from someone claiming to be from the Social Security Administration. They claim your bank account will become frozen and ask you to purchase gift cards in order to avoid being arrested.
Gift card scams are increasing in popularity and people are falling for them more often. The median loss to gift card scammers was $700 in 2018. It’s now $1,000
According to FTC data , scammers are more likely to target older people. 19% of fraud reported by Americans between 50 and 59 involved gift cards or rechargeable cards. This number rises to 30% for Americans aged 80+.
This article will show you how to spot a gift card fraud and how to avoid being conned.
How gift card scams work
Here are some more examples from FTC that illustrate how this scam might work.
- Someone calls you claiming to represent Amazon or Apple. The caller claims that there is a security issue with your account and that the only solution is to purchase gift cards and send them pictures of the back.
- A person pretending to be your boss sends you emails or texts asking you to purchase gift cards. They claim they are unable to attend meetings or that they have an urgent client need.
Scammers will often tell you which gift cards they want and where you can buy them. The most popular gift card scams that were reported to the FTC included Target, Google Play Apple, eBay, Walmart, and Apple.
Some scammers ask victims to make multiple purchases at different stores while others keep them on the phone. The scammer will have access to your funds as soon as you give the gift card number, and any security code on the card.
Gift card frauds are different from other types of fraud. Instead of scammers accessing money through your bank account or credit card, you have to do the work. This makes it difficult to find the true culprit. Scammers use gift cards which are more difficult to track than other forms. They also often use fake phone numbers, which can look legitimate and show up on caller ID.
It’s easy for you to think that you are smart enough to avoid being taken advantage of. It’s easy to become overwhelmed in the heat of the moment. It can be frightening to hear that your bank accounts may be locked or that you might be arrested.
How to Avoid Gift Card Frauds
Retailers train employees to identify potential victims of gift-card scams. Target stated in a statement to Forbes Advisor that they have increased signage in stores to warn guests about common gift card scams and that team members are better educated so they can spot distressed guests purchasing gift cards and intervene if necessary.
A gift card purchase might not be suspicious to a cashier, especially since many people are purchasing them as gifts during the holidays.
Avoiding gift card scams is easy. Remember that no legitimate company or government agency will ask payment via gift certificates. If in doubt, hang up and block the caller from texting or emailing you. (Don’t forget to delete their messages–more about that later.)
Keep your receipt in case you are the victim of a gift card fraud. It contains the identification information for the gift card. Next, take the following steps:
- Contact the retailer who issued the gift card. Find out how to contact them about gift card fraud.
- Make a police report. This may help you to get help from the gift card issuer.
- Report fraud to FTC. Take screenshots of all messages and include times, dates, phone numbers, email addresses, and emails. Although the FTC cannot resolve individual cases it can investigate fraud reports and share them with local law enforcement.
- Your state attorney general should be notified of fraud. Similar to reporting fraud to FTC, the attorney general of your state investigates larger fraud issues than individual cases.
Even if the scam isn’t for you, it’s worth taking a few moments to report the FTC to your state attorney general. This could help to catch fraudsters and stop them from victimizing others.
Scammers prefer Target gift cards
FTC reported that gift card frauds frequently featured Target as the retailer.
Target gift cards were reported twice the amount of any other brand. Target gift cards were reported as being stolen by 33% of victims.
Target stated in a statement that “Unfortunately, gift-card scams remain a persistent problem across the retail sector.” Target takes these crimes seriously. Target employs a multi-layered approach to combat fraud, which includes team member training, technology, and collaboration with law enforcement.
