According to a survey conducted by the AARP, 1 in 10 people has fallen victim to gift card scams. The AARP is an advocacy group for older Americans, but their survey included 1,000 adults of age 18 and older. In this group, 1 in 3 adults said that they or someone they know has been approached to purchase a gift card to pay a bill, fee, or debt.
Gift card scams are a pretty big problem. While the amount of money you can lose in such a scam may not be astronomical, the sheer scale of such scams is worrisome. In fact, according to the Federal Trade Commission, gift cards have been the number one most reported method of fraud payments since the year 2018.
Since that time, Americans have lost a collective $245 million to gift card scams, with the average person losing about $840, says the FTC. According to the AARP survey, about 11% of Americans who were requested to purchase gift cards actually ended up doing it. That seems like pretty good odds if you are the fraudster!
The top reason why gift cards are pushed is to use them as a payment method for a fee, often associated with winning a larger lottery or sweepstakes, or even to deal with a Social Security number or account problem.
The Covid-19 pandemic has only sought to increase such cases. Scammers have preyed on innocent Americans by selling fake cures and treatments for Covid, and there has also been an increase in identity theft linked to things such as unemployment benefits.
According to the FTC, the loss reported linked to Covid since January 2020 is upwards of $400 million! Nearly 250,000 people have submitted fraud reports, with the typical person losing about $350. However, the number of fraud victims is assumed to be much higher since this figure only represents those who came forward voluntarily to file reports. Imagine how many others may have not, or worse, aren’t even aware that they are being scammed!
How to be Vigilant About Gift Card Scams
In a gift card scam, fraudsters convince targets they need to purchase a gift card or an electronic voucher that they can use to pay bills, taxes, or some other financial obligation. They then ask the unsuspecting customer to read the information on the back of the card so they can collect the prepaid value for themselves. It is probably a scam if someone is asking to listen in on your call to confirm the balance or whatever other reason.
It is worth noting that no legitimate government agency will accept a gift voucher as a mode of payment. Therefore, if someone is pushing a gift card to you for such a purpose, you should know that it is a fraud. The IRS does not make personal calls (or send emails) and demands you make payments with gift cards!
Always make sure to only buy discounted gift cards from reputed sellers who offer customer service and a money-back guarantee on purchase. Make sure the packaging on the gift card hasn’t been tampered with. If it seems torn or the PIN seems to be visible in any form, return the card to the cashier and request a different one be issued.
Check the activation receipt you receive on purchase to ensure that the gift card number listed on it is the same as the one on the gift card you are issued. If the numbers don’t match, ask to see the manager as soon as possible. You should also save the purchase and activation receipts until the gift card has been redeemed.
In another scenario, when a customer purchases a gift voucher at a store, an employee who is in on the scam may discreetly exchange the legitimate card for a duplicate at the point of purchase. If you purchase a gift voucher at a store, make sure to keep your eyes on the card at all times and ask for it to be returned as soon as it has been used so there is no chance of it being swapped.
A Final Note
The one positive thing about gift card scams is that you won’t end up losing more than the value of the card, the rest of your assets are not vulnerable. Still, it can be pretty annoying to fall victim to such fraud. And if you are facing financial difficulty, being lured into such scams can have a bigger impact on your overall financial standing as you may be unable to pay taxes, loans, and such.
Use the tips we have mentioned above to be vigilant about such fraud. Only buy gift vouchers from reputed sellers, check the package and activation codes upon purchase, and never listen to anyone who tells you that gift cards are the only way to pay for something!