Watch for Gift Card Scams

Gift cards make convenient gifts to give and are widely loved by receivers and givers alike. forecasts that gift card spending will hit $378.97 billion for 2020, with reaching $510 billion by 2025.

With so many people buying gift cards to give friends, families, and work colleagues, it makes sense that prime buying time, A.K.A. the holiday season, is also a time that is fraught with gift card scams which require you to keep your guard up.

Overview of Scam Methods

Whether you are a giver or receiver of gift cards, the FBI encourages you to be vigilant and cautious when giving or using gift cards. Below is an overview of the most popular types of gift card scams, their warnings signs, and what you can do about them.

  • iTunes for the IRS. While all gift card scams are a little different, one that was getting much attention in 2016 was an IRS scam that had desperately frightened people purchasing iTunes gift cards to repay money they supposedly owed the IRS. The scam became so widespread that CVS stores were posting on-screen notices to customers purchasing gift cards.
  • Number Scams. Another scam that is getting attention these days involves enterprising fraudsters who look at gift card displays in stores and jot down the numbers. Then, they wait a few days to call to see the available balances. Once you activate the card, usually upon purchase, they can in some cases spend the balance of the gift cards online before the recipients even receive the gifts. Then when the gift card recipient goes to redeem the card, the balance has already been depleted.
  • Imposter Scams. Another popular form of scams is what is known as imposter scams. In this scam, fraudsters pose as a relative in a dire situation asking for large amounts of money in the form of prepaid gift cards. CBS News reports that older adults are particularly vulnerable to these types of scams that often use the actual names of family members when perpetrating the scams.

Protecting Yourself from Scammers

Below are tips to protect yourself from the above popular gift card scams.

  • What you can do about iTunes gift card scams: If you receive a telephone call telling you that you owe money from the IRS and it must be repaid with an iTunes gift card, immediately hang up. If you get an email detailing the same, don’t click on any links within the email or respond. Simply delete it.
  • What you can do about number scams: Be sure to only purchase cards with covered numbers that are free from tampering. That eliminates the possibility that a scammer copied the number. That way, only your intended recipient will get access to the goodies this card can buy.
  • What you can do about imposter scams: If someone is claiming to be your relative calls requesting emergency funds via a gift card, make sure you text or call that person to verify the need before rendering aid. The New York State Attorney General’s Office warns that people should never provide gift card numbers via phone or Internet to people claiming to be relatives, government agencies, or law enforcement. Additionally, you should never wire money to strangers for any reason.

General Tips to Protect Yourself from Gift Card Scams

You can do a few other things to protect yourself from gift card scams so that your shopping excursions where you will use gift cards will be safer:

  • Contact your local enforcement agencies or reach out to the company directory, if you believe you might be a victim of a gift card scam.
  • Never use phone numbers given to you by sellers of gift cards.
  • Don’t purchase gift cards from public racks. Instead, try to always purchase gift cards directly from the retailer's brick and mortar or online store.
  • Avoid purchasing gift cards from public auction sites.
  • When selling a gift card via a third party or classified site, do not agree to a three-way-gift-card-balance-check — ever. Your touch tone phone will provide the card's digits to the scammer.
  • Review the: Internal Revenue Service (IRS) Consumer Alerts and the Federal Trade Commission for potential scams.

Don’t let the risk of scammers rob you of the joy of giving gift cards this holiday season. Just take a few precautions to protect your gifts and your financial interests while avoiding scams like those listed above.

Information presented in the Northwest Financial Wellness Center is provided for educational purposes only and is not related to actual Northwest products or services. Northwest makes no representations as to the accuracy, completeness or specific suitability of any information presented. Information provided should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. Northwest recommends you consult a professional for any specific guidance you are seeking.