Scam artists strike hard during the holiday season, when most gift card purchases happen.
Gift cards make for an easy holiday gift—which is why more than $172.5 billion worth were sold in the US in 2021, according to market research firm Research and Markets. That’s also why they’ve become a target for scams, with the Federal Trade Commission reporting $113.5 million in losses to gift card fraud in the US in the first two quarters of 2022.
As you’re getting ready to shop for the holidays (and perhaps add a gift card to your own wish list), here’s how to make sure that you — and your gift recipient — get exactly what you paid for.
Gift cards for payments
Is a gift card really how the IRS or your electric company expects to get paid? No. But that’s one of the biggest gift card scams out there. Fraudsters call, email, or text you pretending to be a government employee, utility, lottery organization, or family member or friend. They say that you owe money for an overdue bill, or need to make a payment in order to collect your lottery winnings, or that a loved one has a crisis situation and needs immediate financial help.
Then they send you out to the stores to purchase gift cards, and give them the numbers and PINs so they can access the funds. According to the Federal Trade Commission, the most requested cards in this scam are Target, Google Play, Apple, eBay, and Walmart.
Solution: Know the payment rules
Government agencies, utility companies, and lotteries will never ask for payment via gift card, and no legitimate lottery is going to require payment to collect your prize. Think twice whenever anyone requests money this way — and call the actual agency or company directly to verify what you owe. You should also confirm independently (via a direct call to their number or to another family member) whether your loved one is truly in dire straits — especially as phone scams are on the rise, with Americans losing nearly $30 billion to it each year, according to True Caller.
Gift cards from fake sites
When you search for “gift cards” online, you’ll find a whole slew of places to buy them — some of them offering significant discounts. On scam websites, either the card never materializes or it doesn’t have the correct balance (or any balance) added to it.
Solution: Go straight to the source for gift cards
The best way to avoid fake sites is to buy gift cards only from sites you know and trust (and are sure are legit). Major retailers like Costco, Target, Amazon, and Walmart, which sell gift cards to other stores along with their own, will stand by your purchase and reimburse you if your gift card doesn’t work. Double check the URL before you buy and check out Trustpilot reviews from other shoppers to avoid purchasing from an imposter.
Deeply discounted gift cards
Everyone loves a bargain, and this time of year, whether it’s on eBay, another online auction site, or a gift card exchange app, there are a ton of places where you can buy gift cards on the secondary market at a reduced price. But sometimes that deal may be a little too good to be true — which you discover when the card never arrives or comes with no money on it.
Solution: Seek out legitimate exchange sites
Use sites like CardCash and Raise, which have guarantees that help protect you for up to a year past the purchase. Research any gift card exchange sites and check their reviews on Trustpilot to ensure that they’re legitimate before you buy.
Tampered gift cards
Buying a gift card in person from the store may seem like the best option for avoiding a scam. But people can tamper with those cards, writing down the card number and the PIN. They’ll wait for it to be activated, then take the balance before you even use it.
Solution: Inspect gift cards before you buy
Look for any damage or missing protective stickers that could indicate tampering. In that case, tell an employee and check the racks for a gift card with intact packaging. Always hold on to the receipt, so you can report and get a refund if the gift card comes up empty.
What to do if you've fallen victim to a gift card scam
If you do fall for a gift card scam (fraudsters are coming up with more sophisticated methods all the time), report your situation to the FTC in the US or Action Fraud in the UK, so they can alert law enforcement agents and protect other shoppers from the latest ruse.
Staying safe from gift card scams
Worrying about fraud during the gift-giving season is disheartening, but knowing which gift card scams to look out for — and how to verify sellers — can help ensure that the gifts you purchase are legit.
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