Gift cards make gift-giving easy and convenient. Unfortunately, they are also a popular way for scammers to trick you into giving them money. Gift cards act like cash, and once they are used, it becomes very difficult or impossible to get that money back or trace it back to an individual – which makes them very appealing to scammers. It’s important to understand what gift card scams are and how to avoid them because if you become a victim, it’s not always easy to get your money back.
What Is a Gift Card Scam?
A gift card scam occurs when a scammer (usually pretending to be someone else) demands that you make a payment in the form of gift cards for a set amount and is often initiated through contact either by phone, text, or email. Someone may call you and claim to be a representative from the IRS, a financial institution, or a local organization. A cybercriminal may email you with a bogus phone number to call or include a fraudulent link that will install malware on your computer. They may even pose as a family member or friend to deceive you.
A common theme with gift card scams is a sense of urgency or a demand for action. Fraudsters will insist you need to act right away, or there will be consequences - like your computer will get locked or even you’ll be arrested. They may claim there is fraudulent activity on your account, and you need to act quickly to correct the error. Alternatively, they may use a positive approach like stating you’ve won a prize and must pay fees to receive it.
Once a scammer has your attention, they tell you the way to resolve the problem or claim your prize is to make a payment in the form of gift cards. They often request to stay on the phone with you while you purchase gift cards in the amounts they request. To avoid drawing attention to a large transaction, they may suggest purchasing the cards from multiple retailers. After the gift cards are purchased, they will demand the gift card number and PIN. When the scammer has the gift card information, they can immediately use the card and deplete the funds.
Unlike many other scams where a financial institution may be able to recoup the money you’ve lost, you have no dispute rights if you become a victim of a gift card scam. The money is simply lost. This is because when you purchased a gift card in these scenarios, you handed over cash or authorized the retailer to charge your debit or credit card. And once you paid the retailer, you were given the card that you purchased, so they’ve met their obligation. This leaves financial institutions with nothing to dispute – there was no unauthorized access to your account, and you paid for something you received.
What Should You Do if You Sense You’re Being Scammed?
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If you receive a suspicious phone call that threatens you or demands action, hang up and contact the company directly to determine if the call was legitimate.
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If you receive a suspicious email or pop-up on your computer, do not click on any links.
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If you’ve purchased gift cards, contact the card issuer immediately to see if the cards can be canceled. Some companies are helping to stop gift card scams, so you may be able to get your money back.
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Contact local authorities, the FTC, and your financial institution to notify them of any scams or suspicious activity. Every report makes a difference, even if it happened a while ago.
Keep in mind that gift cards are not a legitimate way to pay bills/fees or make payments to organizations. For more information on gift card scams, visit the Federal Trade Commission’s website. For more tips on how to avoid scams and keep your money safe, visit our Resource Center and click on the Security category.
