Gift cards are a convenient last-minute gift option, but unfortunately, scammers have also found ways to exploit them. According to the Federal Trade Commission (FTC), gift cards were the preferred method of payment for scammers in 2021, resulting in a staggering $148 million in stolen funds.
Here’s how the physical gift card scam typically works: Scammers target gift card displays, especially those located out of sight from cashiers or pharmacy counters. They manipulate the packaging to remove any film strip, record the gift card and pin numbers, and conceal their tampering. Some scammers even use fake barcodes to cover up the card’s original barcode. They then create a computer program that tracks these cards. When one of the compromised cards is activated at the register, the criminal is alerted and can drain the funds before the card is used by the intended recipient.
Scammers favor gift cards because they provide quick cash and lack the same level of protection as other payment methods. Banks are obligated to assist customers in recovering funds from unauthorized transactions on credit and debit cards, but gift cards are not covered by the same regulations, specifically the Electronic Funds Transfer Act. This lack of protection makes it difficult for consumers to get their money back if the card has been fraudulently used.
If your gift card funds have been stolen, there is no guarantee that the retailer will refund your money. Without a gift card receipt, proving that you were a victim of fraud becomes even harder. Retailers may question whether you actually spent the funds and lost the receipt. Therefore, it is advisable to avoid purchasing the first gift card you see on display. Instead, opt for cards located towards the back of the rack, as scammers typically target the front of the display. Alternatively, choose gift cards that are within the cashier’s line of sight, as these are less likely to have been tampered with. Buying gift cards online from reputable retailers can also minimize the risk of physical tampering, although online gift card databases are not immune to breaches.
Consider giving money the old-fashioned way by placing cash in an envelope and physically handing it to the recipient. If you do decide to buy a gift card, there are several measures you can take to avoid scams. Physically inspect the card for any signs of tampering, such as wrinkles or tears. Ensure that the pin code is not exposed. Verify the balance and retain the gift card receipt. Cross-check the gift card’s activation receipt to ensure the numbers match. If you discover that the balance is zero when you attempt to use the card, immediately return to the retailer with the receipt for assistance. It is crucial to use gift cards promptly, as leaving them unused for an extended period gives scammers more time to exploit them. Some retailers offer the option to register gift cards, which allows you to track the remaining funds.
Beware of individuals who attempt to persuade you to pay for goods or services using gift cards. Scammers often use high-pressure tactics to convince people to buy gift cards and share the numbers as payment for fictional obligations, such as unexpected bills or taxes. Remember that gift cards are intended for gifting, not as a form of payment. If someone has coerced you into disclosing gift card numbers or requested a photo of the card, retain the physical card and receipt and report the incident to the card issuer immediately.
In the unfortunate event that you fall victim to a gift card scam, contact the retailer immediately to report the fraudulent activity. While there is no guarantee of recovering your funds, alerting the retailer keeps you in the loop. The FTC has provided a list of contact information for various gift card companies if you need to speak with a representative.
By implementing these precautions and staying vigilant, you can minimize the risk of falling victim to gift card scams and protect your hard-earned money.
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