Gift cards are a convenient way of gift-giving, and many organizations use them to incentivize and encourage employees. However, they’re not without risk, and gift card scams occur more often than most people think.
But you can generally avoid gift card scams if you know enough about tactics tricky and persuasive scammers use to empty their victims’ wallets.
Gift Card Fraud Statistics
According to an FTC study, gift card fraud happens every day, but fewer than 5 percent of consumers report the crime. And in 2021, almost 40,000 consumers lost $148 million in gift card fraud, per the FTC’s Data Spotlight report.
The same report also revealed the following.
- The number of reported gift card fraud and losses increased between 2018 and 2021. Also, consumers who lost $5,000 or more from gift card fraud are up by 8 percent.
- Scams rose by 14% in the first nine months of 2021.
- The median losses reported increased from $700 to $1,000.
- Scammers prefer Target. The median reported loss for Target gift card scams is significantly higher than any other brand. Thirty percent of consumers that bought a Target gift card lost $5,000 or more.
How Do Gift Card Scams Work?
You’re not alone if you’re wondering how gift card scams work. Most people are unaware of the tactics used by scammers, making it more likely that they’ll become victims themselves.
So how do gift card scams work?
Usually, the process of defrauding someone is as follows.
1. Contacts the Victim
The scammer will reach out to the victim, pretending to be someone else or a business entity. This is how they gain their victims’ confidence; usually, it’s a phone call. Scammers know that a phone call is more personal, and they can easily gauge the situation as things progress.
2. Pressure the Victim into Doing Something
Next, the culprit will pressure the victim into doing something that involves buying a gift card. They typically threaten their victims with something that induces fear. Then trick the victim into paying with gift cards to resolve the issue or situation.
3. Redeem the Funds
Once the victim makes the gift card purchase, the scammer will immediately grab the number and pin from the victim to redeem the funds.
Gift cards are different from debit and credit cards because it’s like paying cash. They also typically have fewer protections for consumers compared to other payment methods. As a result, law enforcement finds it difficult and, many times, impossible to track gift cards.
The Different Types of Gift Card Scams
There are many types of gift card scams. The most common ones include the following.
- Visa gift card scams
- eBay gift card scams
- Amazon gift card scams
Let’s look at some of the approaches scammers use to defraud consumers. That way, you’ll be ready to spot fraudulent attempts.
Posing As the Government or IRS
Scenario: Someone calls you claiming to be from the government or IRS, but it’s a scam. The culprit will usually make scary claims, such as saying you owe taxes and must pay up or else.
What to do: Verify the person is indeed from the said entity by hanging up and calling directly. Be sure to use a number you know is from the official organization – not the one appearing on your phone when the scammer called.
Friend or Family Emergency Scam
Scenario: You receive a call from someone claiming to be a friend or family in an emergency. They want your help and ask you to send money, but make sure no one knows.
What to do: This is a scam. Don’t do it. If you’re concerned that the person could be telling the truth, hang up and call your friend or family directly.
Posing As a Retailer Offering Deals
Scenario: A call comes through, and someone claims they are from a reputable retailer. They offer you a hard-to-pass-up deal but require payment in gift cards.
What to do: Don’t do it. Your best bet is to ignore the entire offer and report the incident (more on how shortly).
Fake Tech Support Gift Card Scam
Scenario: You receive a call from a tech support agent claiming to be from Microsoft or Apple. The person says there’s a problem with your computer, and they can fix it, but you must pay.
What to do: Don’t and hang up. It’s all a lie to steal your money.
Scenario: You meet someone on an online dating site. After chatting for a few days, weeks, or months, the person asks you for money to help them with something.
What to do: That’s usually the romance scammer at work. These people will make up stories to trick you into sending them money in gift cards. Do not fall for it.
Scenario: The cashier at the store activates a different gift card instead of yours. You didn’t notice what they did and left with your gift card, thinking it was active. Unfortunately, you try using it and discover there are no funds loaded.
What to do: Always watch cashiers as they scan your purchased gift card. Also, double-check that the gift card number matches the one on your activation receipt. If it doesn’t, get the store manager or security involved immediately.
The cashier in the scenario is keeping the activated gift cards while handing out blanks to customers. This scam only works because the cashier is in on it.
Fake Gift Card Activation Sites
Scenario: You receive a gift card and must visit the activation website to activate the card for use. On the website, you enter your gift card number, expiration date, and verification code (CVC). A message appears noting you’ve successfully activated your card. Later that day, you try to use your card and find it empty.
What to do: Note that the scammer stole the gift card information by creating a fake activation website. They then activate the card on the correct website and drain the funds.
So verify the website address every time. The web address of fake sites is usually very close to the official ones (e.g., amazonactivate.com vs. amazonactivte.com). This is so more people will accidentally visit the phony site because of a typo.
But scammers don’t only go after people who mistype the web address. They also lure victims to their fake sites through paid advertising, targeting the official activation site keywords to appear as relevant ads.
This makes it even harder to detect the scam. However, the website appearance is often a big giveaway. Scammers aren’t generally good at mimicking legitimate organizations. So fake sites usually have an unprofessional appearance, such as misspellings.
Fake Prize Scam
Scenario: Someone calls claiming you won a prize, but you must first pay the fees with a gift card to receive it.
What to do: Don’t follow their instructions. Even if you signed up to win something in the past, don’t assume the person is being truthful. No agency or business with legitimate intentions should ever ask you to pay with a gift card.
Posing As a Utility Company
Scenario: The caller claims to be from your utility company and threatens to cut off service for unpaid dues. They say everything will be fine as long as you pay immediately.
What to do: Ignore the caller. Your utility company won’t contact you and ask for gift card payments.
Fake Check Scam
Scenario: Someone sends a check for way more than you were expecting. When you contact the person, they tell you to deposit the check and provide the difference on gift cards.
What to do: The check is fake, so don’t do it. And even if you could deposit it, banks take several days to authenticate checks but release funds to customers sooner. Therefore, you’ll end up with a bank reversal.
Tampered Gift Card Scam
Scenario: You pick up a gift card from the store and load it with $100. The next day your recipient tells you the card is empty. You wonder where your money went.
What to do: This is a tampered gift card scam. The scammer takes legitimate gift cards and replaces the barcodes on the back. So when a customer picks up the card and loads it, they unknowingly put money on the scammer’s card.
Check the back of your gift card. Use your fingers to feel it. You should feel a slight bump when touching the fake barcode.
How to Prevent Gift Card Fraud
Few people know how to prevent gift card fraud, and law enforcement struggles with this crime. But you can avoid gift card scams by following simple rules or fraud prevention measures.
- Gift cards are generally for giving – not paying.
- Ensure you’re activating your gift cards on official websites.
- Don’t trust any weird message or call you receive from people claiming to be family members or friends.
- Government organizations will never accept payments via gift cards.
- Retailers prefer credit or debit cards for payments in general.
- Only engage as much as you need to with suspicious calls.
How To Report a Gift Card Scam
Contact the official issuing company immediately if you become a gift card scam victim. For each vendor or company, you’ll need to have the gift card and receipt on hand to report the incident – and potentially recover your funds.
Support Contact Information For Gift Card Companies
Contact customer support and let them know about the fraud.
Call and follow the instructions at 1 (888) 280-4331. You can also learn more about how Amazon handles fraud here.
Google also has some helpful info on their help center about what to do if you fall victim to a gift card scam.
Contact Apple Support at 1 (800) 275-2273 and say “gift card” to connect with a representative.
Once connected, ask the representative if your money is still on the gift card. If it is, the rep can freeze the card, and you may get your money back. You can learn more about how to report a gift card scam to Apple here.
Visit steam support to report the scam. If you bought the card from Target, call their support at 1 (800) 544-2943 and follow the instructions provided.
For more information about how to deal with a steam gift card scam, visit their dedicated resource here.
Awards2Go Gift Cards Security
By now, you know how serious a problem gift card scams are today. The excellent news is Awards2Go gift cards are Visa, so they have the same top-grade security as any other Visa card. That also means you or your employees can use these cards anywhere Visa is accepted.
Further, the Buy Now Load Later feature significantly reduces the risk of gift card scams. With that feature, Awards2Go customers can purchase their cards without loading money immediately. Instead, they can load their cards right before giving them to recipients.
That all noted, you can contact customer service to protest fraudulent transactions if anything suspicious occurs.