It can happen to anyone at any time. It even happened to me just the other day. When I was casually scrolling my Facebook feed I saw a post on a local marketplace group that grabbed my attention. There it was, the perfect coffee table I had been searching for! I contacted the seller through Facebook Messenger to inquire if it was still available and it was! Even better, they would deliver it to my doorstep. But a minor inconvenience - I had to pay upfront, before the delivery, and... in the form of an eBay Gift Card? Hit the breaks. Not cash, not a debit card, but a gift card? Sounds suspicious? Because it is.
Why Scammers Use Gift Cards
Gift cards work like digital cash. Fraudsters can immediately redeem the code of the voucher without leaving any trace. As soon as they have the various gift card numbers, it varies by retailer whether there is just a number or also a PIN number and other information, from the back of the card, they are able to withdraw the remaining card balance.
Even more tricky, gift cards can be misused in many different ways. Since they are not connected to your name or any other personal data or contact information, criminals can resell them for cheaper value or even convert them into cryptocurrency.
And since they are, essentially, worthless after they have been redeemed, the activation codes can’t be refunded, which leaves the victim basically powerless. At that point there’s not much law enforcement or any other government agency can do to assist.
How Scammers Use eGift Cards
The question is, why is gift card fraud becoming so common? Quite simply, Americans alone spend billions of dollars on gift cards making it the perfect target market for scammers. These criminals often ask you to purchase a gift card from a specific retail store, such as Walmart, CVS, or Target. And people who want to rip you off will think of the most creative ways to go about it. How? Here are a few basic scenarios:
- You receive a phone call from a so-called government employee who claims that you need to pay for your insurance. He asks for payment in the form of a gift card.
- You are asked to pay with a digital voucher while using Facebook Marketplace or other online auctions sites instead of cash or bank card.
- You won a contest or sweepstakes, yay! But first, you need to pay the fees… you guessed it, with a gift card.
- You might receive a call from someone claiming to be a government employee telling you to pay your taxes or other fees with a gift card in order to avoid a fine. The government, whether the IRS, Social Security Administration, or any other agency, does not operate in this way; this is definitely a scam.
And these are just a few of the more common red flags out there. There are plenty more scams to look out for.
How You Can Safely Use Gift Cards
A good scammer can outsmart the best of us, and that’s why gift card scams have become quite an issue for unsuspecting internet users. Thankfully, we’ve got some tips that can help you stay safe when using gift cards.
Gift cards should only be given as gifts to people you know or used as payment on the site they are intended for. NEVER use them as a form of payment to somebody you don’t know or a website you do not trust.
Redeem your code immediately or as soon as you can. This will minimize the risk of someone stealing your balance or you losing it or forgetting about it.
Choose an official store with secure gift cards. Buying from online auctions or social media or unauthorized sellers is not advised as you can never be certain you are not receiving stolen or fake gift cards. Websites like Dundle (US), are a much safer alternative.
Never share your code. Gift cards are meant for personal use only - meaning that they should be redeemed by you or someone that you know. Whoever sees it, can use it immediately. Remember - once redeemed, the codes can’t be blocked or refunded!
When you purchase gift cards, ensure the protective stickers are intact on the back, the bar code hasn’t been tampered with, and that the PIN number hasn't already been revealed.
Outsmarting Gift Card Scammers
Catching gift card fraudsters can be tough, but, bad news for them, not impossible. Though they may think themselves uncatchable, how mistaken they are. For example, two men in California formed an elaborate gift card scheme and thought they could vanish without a trace. They were stopped by the police in Utah and are now sitting in jail for fraud and money laundering. Another woman was caught while buying expensive electronics with fraudulent gift cards. When she tried to pay for a MacBook worth $1700 with the gift cards, the cashier was suspicious, and, needless to say, it ended badly for her. She was arrested for, amongst other things, theft and fraudulent use of the cards. Scammers are being caught by the police daily. Advanced verification systems, fraud recognition, and, most importantly, growing awareness of online security is helping catch these fraudsters in the act.
Several major retailers, websites, and card issuers allow you to report fraud on their sites. These include Amazon, Google (for Google Play cards), Apple (for iTunes gift cards), and more, which have a contact us or tech support option where, in some cases, they may be able to take action. There are also websites that share scam alerts, such as the Better Business Bureau. You can also help others by reporting scams, even if you didn't follow through with payment, to the ftc or your state attorney general.
Protect Yourself From Gift Card Fraud
Sadly, this cybercrime is not new and it’s not going anywhere, but you can definitely do your part to stay ahead of it. We often think of identity theft and other cybercrimes being committed around holiday seasons; however, they are more common than you may think and are happening every single day. Don’t be taken advantage of when purchasing your favorite popular gift card.
Protect yourself and your family members and other loved ones by following these tips. Always listen to your internal alarm bells and avoid scenarios that put not only your gift card, but internet safety at risk.