This Christmas – Watch Out For Gift Card Theft and Scams

02 Dec

Due to a global supply chain issue and a major increase in holiday spending this year, gift cards may be particularly popular this year. As electronics and other household goods have become more difficult to get ahold of, there is a good chance that shoppers may be opting for gift cards this year which will most likely lead to an increase in gift card scams. 

According to the Federal Trade Commission (FTC) there have been roughly 35,000 fraud reports related to gift or reload cards in the first six months of 2021. A reload card is simply a prepaid debit card that money can be added to on a regular basis.

Scam spotter, a cybersecurity platform owned by Google and the nonprofit Cybercrime Support Network said in a recent press release that this year could be the worst year for gift card scams ever recorded. According to the FTC, gift cards have been one of the top fraud payment methods since 2018, their statistics show that there were roughly 44,000 reports of gift card and reload card fraud in 2020. 

What is a gift card scam?

Gift card scams can take a few different forms, everything from a caller claiming a you owe the IRS money to a cashier switching out the card you just purchased. Here is a quick overview of some of the more common gift card scams and how to avoid being scammed:

IRS: A scammer may call and claim that you owe the IRS money, and you will be arrested soon if you do not pay what you owe. They will then ask you to pay what you owe with gift cards, asking you to purchase specific cards and then read the gift card number and PIN to them. 

Once this is done, they will use the gift card to purchase things online. They don’t always say it’s the IRS, it could be your power company calling about unpaid bills or other local utility, regardless of what name they use, it is always a scam. No legitimate business, much less the IRS is going to call you and ask you to pay with gift cards.

Shifty cashier: It is possible that the cashier at the store you are purchasing the gift card is a scammer. Cashiers sometimes activate the card but then switch the cards and hand you back a card that has not been activated. They then take the activated card and spend the money on it. Always keep an eye on the card you are purchasing as the cashier activates it to make sure you get back the one you are paying to activate.

Online auctions: It is never a good idea to purchase a gift card from an online auction. Scammers will post gift cards claiming it has $50 on it and when you receive it (if they send it at all) the card may only have $5 in credit on it. Only purchase gift cards in the store or from their official website. 

Stolen Numbers: Scammers will often go to stores where gift cards are sold and scan them with a magstripe reader that will store the card numbers. The scammer puts the cards back and leaves. Later, the scammer will check the cards online or via a customer service number to see if they have been activated as well as the balance on the card. They can then use the card information to purchase things online. The best way to avoid this scam is to not purchase gift cards from store displays. 

If you do end up falling for a gift card scam, call the issuing store as soon as possible, the faster you report the scam, the better your odds of getting some of your money back.

Tags: , , ,