5 Questions to Ask to Avoid Gift Card Scams
In the first nine months of 2021, reports of victim-assisted gift card fraud toppled the previous year’s numbers by 28%1. Since education is the most effective crime-stopper, this list of questions can help consumers recognize and avoid buying gift cards for scammers.
From romance scams and sweepstakes shams to phony tax audits and beyond, the number of ways fraudsters trick people into willingly turning over their funds is at an all-time high. The complexity of their schemes has increased over time as well. For example, the old ploy of getting grandma to buy gift cards to pay ransom for a kidnapped grandchild is a simple ruse compared to the highly-orchestrated, bogus job offers now reported regularly on LinkedIn. But regardless of the tale told or the technique used, the main tragedy in most of these scenarios is that the victims are unknowing accomplices to their own crimes.
“Victim-assisted gift card fraud” is a term used to describe scams where the victims, though misguided, participate in the schemes by purchasing gift cards to send to their scammers. They may do so under duress, but their actions are generally intentional and irreversible. (Some even later admit to spurning warnings from people who vehemently tried to stop them from buying gift cards for scammers.)
Here’s an example of how a victim-assisted gift card scam works.
A college student receives a text message from his bank stating that his account is about to be frozen. In a panic, he calls the telephone number in the text. An “agent” picks up the phone and explains that the account is the subject of an investigation. To protect his money, the young man must quickly go to the nearest automated teller machine (ATM), withdraw as much money as possible, and use the cash to buy gift cards. (Because, obviously, having that much cash in a wallet wouldn’t be safe.)
Once the gift cards are purchased, he needs to give the gift card numbers to the agent to ensure the money is all there.
And that’s how they get you.
After receiving the gift card numbers, the agent drains the card balances and insists that the victim return to the ATM to withdraw more money and buy more gift cards. This cycle continues until the student discovers that the text didn’t come from his bank, the agent is a scammer, there is no investigation, and the money is gone.
Sad as these situations are, victims generally lack financial recourse because they compromised their own accounts. In other words, they may have withdrawn funds and bought gift cards under pretext, but the transactions are still legitimate. If notified in time, banks, stores, and gift card issuers can try to thwart crimes in progress or assist with law enforcement investigations after the fact. However, they can’t recover funds from unidentified scammers or indemnify every account holder who falls for a ploy.
That’s the bummer news. Now here’s the good news.
Consumers Can EASILY Spot Gift Card Scams
Fraudsters may be clever, and their stunts may be well-crafted. But generally, all gift card storylines lead to the swindler telling the target to buy gift cards and send back the card numbers. It’s that straightforward. So, educating consumers to look for this pattern is the best way to stem the rise in victim-assisted gift card fraud.
And that’s how we stop them.
Before complying with any request to buy gift cards, people should ask themselves the following questions:
1. Is Someone Pressuring Me to Buy Gift Cards?
A telltale component of a gift card scam is the requirement to buy gift cards to receive prize money or meet some financial obligation. Gift cards are for gifting. Whether a single gift card for a relative’s birthday or a bunch of gift cards for rewarding customers, gift cards exist to surprise and delight people. Gift cards are not a means to pay rent, get a loved one released from jail, buy a car, settle a debt, or fulfill any other monetary burden—no legitimate organization will ever require that you purchase gift cards to do so.
If someone is bullying you or sweet-talking you into purchasing gift cards and giving them the numbers, it’s a scam.
2. Do I Need to Buy Gift Cards Immediately?
The instruction to act quickly and quietly is nearly as universal as the request to buy gift cards in the first place. For three reasons, scammers want victims to hastily purchase gift cards without telling anyone. The first is to instill panic—to get people to buy gift cards without reasoning through the situation or alerting others who might be more skeptical. The second reason scammers insist on speed is to run the gambit multiple times before the victims get suspicious. And finally, if scammers use stolen credit cards, counterfeit checks, or other compromised currency in their schemes, they want their victims to purchase gift cards using the fraudulent funds before banks or stores detect a problem and attempt to block the transactions.
If someone is pushing you to buy multiple gift cards in a rush, it’s a scam.
3. Can I Verify the Source?
Whether as a text message from an imitation bank or an email from a phony lottery official, gift card scams of all shapes and sizes generally start with communication (e.g., text messages, social media messages, phone calls, emails, etc.) from fictitious individuals or enterprises. Despite the massive number of scams and scammers, people can easily fact-check worrisome statements by contacting the supposed organizations directly to find out if there is a problem. For example, rather than respond to a text message that says an account will be frozen, the account holder should instead call their bank using the telephone number on their bank statement—not the number listed in the text.
And to be clear, having mutual friends or connections on social media does not count as verification. Scammers create fake profiles (using names and pictures of real people) to meet and interact with potential victims.
If someone you don’t know tells you to buy gift cards, it’s a scam.
4. Would Gift Cards be Required Payment?
When scammers demand gift cards, they generally require victims to buy specific gift cards. The Federal Trade Commission (FTC) recently reported that Target, Google Play, Apple, eBay, and Walmart gift cards top the list of scam favorites.
When asked to buy specific gift cards, people should question whether or not the requested gift cards make sense for the allegedly involved business. They might wonder, for example, “What would my bank do with eBay gift cards?” Or “Why would the Internal Revenue Service accept a gift card for downloadable music, videos, and apps in place of money owed for back taxes?” Gift cards are for gifting. No reputable business or government agency will require gift cards for payment.
If someone is telling you to buy gift cards for payment, it’s a scam.
5. What Should I Do?
If a potential scammer makes contact, people can safely hang up the phone, block the text, delete the email, remove the connection on social media, and disregard the message. If possible, they should additionally mark emails as SPAM or Junk, report fake profiles on social media platforms, and register scammer phone numbers with call filters. They can even file a report with the FTC to assist that organization in collecting data that can be used to fight fraud.
If there is any concern that the message is legitimate (e.g., “do I really owe money on an old mortgage?”), consumers should contact the business directly—using the phone numbers or web addresses found on their statements.
If you receive a questionable message, contact the business, or report the suspicion to the FTC. It’s probably a scam.
In a country laden with the after-effects of the Coronavirus pandemic, rising unemployment rates, and staggering inflation, it is easy to see how struggling consumers would be increasingly susceptible to scams that promise new jobs, improved credit scores, debt forgiveness, and such. And while many of the schemes are detectable, people desperate for quick financial fixes or afraid to contact authorities may be especially vulnerable. But taking a moment to stop and contemplate these five questions can help anyone avoid losing money to gift card scammers.
And, if that’s too much, remember this simple statement: Gift cards are for gifting.
Anyone telling you to buy gift cards for payment or any other purpose is a scammer.
1 Fletcher, Emma. “Scammers Prefer Gift Cards, but Not Just Any Card Will Do.” Federal Trade Commission, 8 Dec. 2021, https://www.ftc.gov/news-events/data-visualizations/data-spotlight/2021/12/scammers-prefer-gift-cards-not-just-any-card-will-do.