Gift Card Scams Increased This Year – Forbes Advisor

Gift card scams are on the rise—and they may be happening just feet from your place in the checkout line.

In the first nine months of 2021, nearly 40,000 consumers reported losing $148 million in gift card scams, according to a new report from the Federal Trade Commission (FTC). That’s more than what was reported in all of 2020, and may be a mere fraction of the problem as fewer than 5% of gift card scam victims report the crime.

Here’s an example of how a gift card scam is pulled off: You get a phone call from someone who says they’re from a government agency, like the Social Security Administration. They say your bank account will be frozen for an investigation and tell you to buy gift cards to avoid getting arrested.

More and more people are being scammed through gift card schemes—and the victims are losing more money. In 2018, the median amount victims lost to a gift card scammer was $700. This year, it’s $1,000.

Older people are more susceptible to these scams, according to FTC data. Of Americans aged 50-59, 19% of fraud reports involved gift cards or reloadable cards. For Americans age 80 and up, that number jumps to 30% of all fraud reports.

Here’s how to identify a gift card scam and how you can avoid getting duped.

How Gift Card Scams Work

Here are a few more examples from the FTC of how such a scam might work:

• You get a phone call from someone claiming to be from Amazon or Apple. They claim there’s a security problem with your account, and the only way to fix it is to buy gift cards and send the caller pictures of the back of the cards.
• Someone claiming to be your boss text messages or emails you asking you to buy gift cards. They say they’re stuck in meetings or it’s an urgent need for a client.

The scammers often specify which gift cards to buy and where to buy them. Target, Google Play, Apple, eBay and Walmart were the most common stores named in the gift card scams reported to the FTC.

Sometimes victims are instructed to make several purchases at different stores, while some scammers keep their victims on the phone while they complete the task. As soon as you provide the gift card number and any sort of security code that’s present on the card, the scammer can access those funds.

Unlike other forms of fraud, where scammers might access money through your bank account, credit card or debit card, gift card scams make you do the work for the scammer—which makes it hard to catch the real culprit. Along with using gift cards, which can be harder to track than other forms of payment, scammers often use spoofed (fake) phone numbers that can appear legitimate, showing up on caller ID as a familiar number or a government agency name.

It’s easy to say you’re savvy enough to avoid getting taken advantage of by a scammer. But in the heat of the moment, it’s all too easy to get flustered. After all, it can be terrifying to hear your bank accounts could be locked, or you could be arrested.

How to Avoid Gift Card Scams

Retailers often train their employees to spot potential victims of gift card scams. “We’ve increased in-store signage to warn our guests of common gift card scams, and we’ve heightened team member education so they can keep an eye out for potentially distressed guests buying gift cards and intervene as needed,” Target said in a statement to Forbes Advisor.

But a gift card purchase may not make a cashier suspicious, especially during the holidays when many shoppers are buying them as valid gifts.

The best way to avoid gift card scams is to remember that no legitimate business or government agency will demand payment via gift cards. If you’re in doubt, hang up on the caller or block them from emailing or texting you. (Don’t delete their messages, though—more on that in a moment.)

If you or someone you know falls victim to a gift card scam, make sure you keep your receipt as it has identifying information about the gift card. Then take these actions:

• Contact the retailer that issued the gift card. The FTC maintains a list of popular retailers and how to reach them about gift card fraud.
• File a police report. The FTC notes doing this may help you get assistance from the gift card issuer.
• Report the fraud to the FTC. Include as much information as you can, including times, dates, phone numbers or email addresses, and screenshots of messages. The FTC can’t resolve individual cases, but it investigates activity and shares fraud reports with relevant local law enforcement.
• Report the fraud to your state attorney general. Much like reporting fraud to the FTC, your state’s attorney general investigates larger fraud issues rather than resolving individual cases.

Even if you don’t fall for the scam, take a few minutes to file a report to the FTC and your state attorney general. Doing so could help catch a fraudster and prevent them from victimizing others.

Read more: How To Avoid Getting Scammed During The Holidays

Scammers Prefer Target Gift Cards

The FTC noted that gift card scams often featured one retailer: Target.

Target gift cards were reported twice as much as any other gift card brand. Thirty percent of people who obtained Target gift cards for a scammer said they lost $5,000 or more.

“Unfortunately, gift card scams are a persistent issue across the retail industry,” Target said in their statement. “Target takes these crimes extremely seriously and we use a multi-layered, comprehensive approach to mitigate fraud that includes technology, team member training and collaboration with law enforcement.”