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Cedar Rapids, Iowa 52401
Your guide to spotting and stopping gift card scams
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Gift card scams are a growing problem. The method of separating consumers and their money used to be by wiring money or bank transfers. Scammers now largely ask their victims to pay them with gift cards because they’re a convenient way to steal money and they’re difficult to trace or recover. Legitimate organizations will not ever ask to be paid with a gift card.
It is important to be aware and to recognize red flags before it’s too late. These prevention tips are important as becoming a victim can happen to anyone and everyone can benefit from knowing how they work. Learning the signs of a gift card scam will help avoid potential financial loss.
What is a gift card scam?
Scammers often demand payment through gift cards because it’s fast, anonymous and hard to trace. Legitimate companies and government agencies will never require payment with a gift card. If someone does, it’s likely a scam.
Here’s how a typical gift card scam works:
- You’re contacted out of the blue. A scammer might claim your electric bill is past due, your computer is hacked, you owe an old debt or a loved one is in trouble. Sometimes they assert that there is a huge prize waiting only after taxes and processing fees are paid. All request payment by gift card.
- You’re pressured to act fast. The scammer demands immediate payment and the sense of urgency is used to stop you from thinking clearly. A vague threat of arrest is sometimes used when fines or debt collect is alleged.
- You’re told to buy gift cards. They may tell you where to go and what type of cards to buy (like Google Play, Apple, or Target). Sometimes they even say they will stay on the line while you go to a store to buy the card.
- You’re told not to speak to store employees. Scammers often warn you not to talk to anyone or jeopardize the transaction. They might even coach you on what to say if questioned about the purchase.
- You’re asked to share the card info. This often includes the numbers and PINs, which they may ask you to text or send via a messaging app.
- The scammer redeems the card immediately. The money is gone before you realize it was a scam.
Providing the numbers from the back of a gift card is just like sending cash. Whether victims give the numbers over the phone or text a photo of the back of the card, they are essentially handing money to scammers, who may quickly drop the funds into foreign bank accounts. It’s nearly impossible to get the money back because gift cards do not have the same protections as credit or debit cards. Scammers use this method of payment for many cons especially in collection, sweepstakes, government impersonation, tech support and romance scams.
Recognize the red flags of a gift card scam. Learning the signs of this scam will help avoid losing money. Scammers often target older adults because they may be more trusting and have available funds. But anyone can be a victim. The simple rule of thumb is to use gift cards for gifts not other purposes. Report scams to help protect others at www.bbb.org/scamtracker and to check for real life reports. This is a tool for fraud prevention, awareness and community protection.
Bobby Hansen is regional director for the Better Business Bureau Cedar Rapids office. Comments: (319) 365-1190; info@dm.bbb.org
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