You can stay safe from gift card scams by checking gift cards for physical tampering before purchasing them and avoiding requests that ask you to purchase gift cards as a form of payment. While gift cards are a common gift that many people choose to give each other, they are also commonly used by scammers for financial gain. According to the Better Business Bureau, gift card scams increased 50% from 2022 to 2023 with losses from January to September 2023 totaling $147 million.
Continue reading to learn how gift card scams work, the different types of gift card scams, how to avoid them and what you should do if you fall for a gift card scam.
What Is a Gift Card Scam and How Does It Work?
A gift card scam is when scammers steal the funds of a gift card they didn’t purchase and use it themselves – leaving the victim with nothing. Depending on the type of gift card scam, the way it works will differ. For example, some gift scams involve physical tampering, whereas other gift card scams require the victim to send the gift card number and PIN to the scammer through an email, text message or phone call.
Types of Gift Card Scams
Here are some of the most common types of gift card scams.
Gift card draining
Gift card draining is when scammers drain gift cards before they’re able to be used by the person who owns the gift card. Scammers do this by going into stores and stealing unpurchased gift card numbers and PIN codes. While gift card numbers and PIN codes are sealed so that no one can see them, scammers unseal them and then reseal them so they don’t look like they’ve been tampered with.
When someone purchases a gift card that has had its numbers and PIN stolen, the scammer has stolen the money on the gift card – “draining” it of its funds.
Payment being demanded via a gift card
In this type of gift card scam, scammers use phishing to get victims to purchase multiple gift cards as a form of payment. Phishing is when scammers pretend to be someone they’re not so they can manipulate victims into doing things for them. For example, a scammer may pretend to be the IRS and claim that the victim owes them money. The scammer may even threaten the victim with serious consequences like arrest if they don’t do what they’re told. Once the scammer has lured the victim in, they tell them to pay their debts by purchasing gift cards and providing them with the gift card numbers and PIN codes.
If a victim falls for this gift card scam, there’s no way for them to get their money back since the “payment” they made was through untraceable gift cards.
Boss gift card scam
In a boss gift card scam, scammers use phishing to pretend to be the victim’s boss. In some cases, scammers may even pretend to be the CEO of the company the victim works at. Typically, boss gift card scams happen through email or text messages. The “boss” will say something along the lines of “I want to surprise employees with $100 gift cards, can you please purchase them without telling anyone.” When the victim does what they’re told, they’re asked to send a picture of the purchased gift card receipt and eventually, the scammer will also ask them to send them the gift card numbers and PINs.
How To Avoid Gift Card Scams
Here are a few of the ways you can avoid and stay safe from gift card scams.
Check gift cards for physical tampering before purchasing them
Gift card draining involves physical tampering of gift cards, which is something you should be on the lookout for when purchasing one. If anything about the seal on a gift card looks off, don’t buy it because it has likely been tampered with. Be sure to also check that the gift card’s PIN is not showing. If the PIN is visible, do not purchase the gift card.
It can be hard to tell if the numbers on a gift card have been resealed by a scammer, however, this is most likely to happen to gift cards that are out in the open for anyone to touch. If you choose to buy a physical gift card, buy one that is placed near the register or behind the store counter.
Purchase virtual gift cards instead
Virtual gift cards eliminate the risk of a gift card being tampered with physically, which can keep you safe from gift card draining. Most online retailers offer the option to purchase virtual gift cards which can be sent to anyone through email.
As a safety precaution, stick to purchasing virtual gift cards from trusted online retailers. Purchasing virtual gift cards from untrustworthy sources can result in you losing money if you unknowingly purchase them from a scammer.
Avoid requests that ask you to purchase gift cards
No legitimate business or government agency will ever ask you to purchase gift cards as a form of payment. Anyone who is asking you to purchase multiple gift cards to pay them, or for any other reason, is likely a scammer and you should avoid communicating with them, especially if they’re displaying a sense of urgency and threatening you with serious consequences.
What To Do if You Fall for a Gift Card Scam
If you fall for a gift card scam, report the scam to the gift card company and the Federal Trade Commission (FTC).
- Report the scam to the gift card company: While there is no guarantee that the gift card company will reimburse you for your stolen funds, letting them know what happened to you can make them aware of the gift card scam so they can notify other customers.
- Report the scam to the FTC: You can report a scam to the FTC by visiting reportfraud.gov. The FTC doesn’t investigate individual reports but they do use reports to investigate scams and fraud so they can better protect others. Reporting your scam to the FTC is important to ensure others don’t fall victim to the same scam you did.
Avoid Falling for Gift Card Scams
Gift card scams don’t just happen during the holiday season, they happen all year round so it’s important to learn how these scams take place and how you can protect yourself against them so you don’t lose money.
Gift card scams are just one of the many scams that are out there today. Learning how to spot a scammer can help you stay safe from all types of scams. Learn how to identify a scammer so you can keep yourself safe from the latest scams targeting both individuals and businesses.
