Beware of Gift Card Scams

Woman holding gift card and smart phone.

Gift cards are so convenient – especially when you aren’t sure what to get someone or are pressed for time. And if you receive gift cards, you have the flexibility to use them however you want. There’s no having to return well-intentioned but missed-the-mark gifts. It’s no wonder gift cards are extremely popular and not just during the holiday season.

Unfortunately, scammers also love gift cards and use them to pull off scams. According to the Better Business Bureau (BBB), gift card fraud is up 50% from 2022. More than ever, it’s important to understand how gift card scams work and what to look out for. 

With the holidays upon us, let’s take a look at gift card scams that so you can protect you, your loved ones, and friends from becoming victims.

How Gift Card Scams Work

One of the reasons gift card scams are (unfortunately) successful is because there’s so many different types. Here are some of the most common ones and how they work, so you can be on high alert. 

  • Tech support gift card scam. In this variation, a caller pretends to represent tech support at a widely recognized company such as Apple or Microsoft. They’ll insist there is something wrong with the victim’s computer and offer to “assist” in fixing the problem. Payment can be made with a gift card. Of course, there is nothing wrong with your computer, but you’ve just been targeted by a scam.
  • IRS gift card scam. In this scam, a target receives a threatening message that’s allegedly from the IRS and claims they are at risk of arrest for tax evasion if they do not pay immediately. However, the scammer insists that payment can only be in the form of a gift card. Often, the scammer will ask specifically for an iTunes gift card, because you know, the IRS always asks for tax payments in the form of digital music. 
  • Romance gift card scam. A new dating partner found through a dating website asks for money in the form of a gift card to help them out of a sticky situation. Believe them and you’ll lose your chance at romance and your money. 
  • Sweepstakes gift card scam. Congratulations! You’ve won a trip to the Cayman Islands! But first, you must pay a small processing fee via gift card. Follow directions and not only will you’ll never see that vacation, but the money you spent on the gift card. 
  • Utility gift card scam. You don’t want your gas or electricity cut off, do you? If you don’t pay up with a gift card, the power will be shut off. They won’t really, but if you fall this scam, you’ll be out the money you spent on the gift card.
  • Balance-check gift card scam. You spot a discounted gift card for sale online and purchase the card. The seller sends you the card, but then asks you to read the numbers over the phone to confirm the balance. If you comply, the seller now has all the information they need to use up all the funds on that gift card. 

How to Identify a Gift Card Scam

Scammers have gotten more sophisticated in how they execute scams, but with some basic knowledge, you can catch onto them before any damage is done. 

Here are four warning signs to be aware of: 

  • The IRS will never initiate correspondence by phone call, text message, or email. They will send letters through the U.S. postal system. 
  • No legitimate business or government agency will insist on payment via gift card. 
  • If you don’t recall entering a sweepstakes, chances are you didn’t win it either.
  • A caller or message claiming a matter is urgent and demands immediate action is typically always a scammer. 
  • Gift cards should be used for purchases or to send as gifts, not as payments. Also, as with all sensitive information, the numbers on your gift card should never be shared over the phone or online. 

It’s best to only purchase gift cards through reputable sellers or those that have excellent customer reviews and/or offer a cash-back guarantee.

What to Do if You Fall Victim to a Gift Card Scam

If you paid a scammer with a gift card or shared your gift card information, immediately take steps to mitigate the damage. 

Contact the company that issued your gift card as soon as possible. You can find the customer service number for most companies on the card itself or with simple Google search. If you still have them, hold on to the receipt and the actual card for proof should it be required. 

If the scammer continues to contact you by phone, text message or email, do not engage further. Block the scammer’s number from your mobile device and mark their emails as spam. 

Finally, report the incident to the FTC and alert your family and friends about the scam.