As the holiday season kicks off, shopping escalates, and so do the efforts of scammers targeting gift card buyers. This season, many honest customers may unintentionally fall prey to these scams, losing money and sometimes personal information. Although retailers and law enforcement work to combat scams, fraudsters are often one step ahead. As a customer, understanding how to spot and avoid gift card scams is crucial to keeping your funds secure.
An AARP survey found that 20% of gift card buyers discovered the cards they purchased had no value, a frustrating outcome for the buyers. Here, we’ll cover how to identify, avoid, and report gift card scams to keep your holiday season scam-free.
What Are Gift Card Scams?
Gift card scams are schemes in which fraudsters trick people into buying or sharing gift card details, often exploiting the trust associated with well-known companies or creating urgency to prompt quick actions.
Types of Gift Card Scams
1. Bots: Scammers use bots to drain funds from gift cards, especially by targeting online gift card balance-checking systems. Once an active card is identified, they use the funds or sell the details, leaving the legitimate owner with an empty card.
Tip: Use your gift card quickly. Retailers should consider CAPTCHA, two-factor authentication, and more secure balance-check procedures to mitigate bot activity.
2. Auction Site Scams: Buying gift cards on auction sites like eBay may seem like a bargain but is often a risk. Many cards sold on these platforms are either inactive or empty, resulting in losses for buyers.
Tip: Always buy gift cards directly from retailers or authorized sellers to reduce your risk of buying invalid cards.
3. Scam Calls from Companies: Scammers may call, pretending to be from reputable companies, demanding bill payments via gift cards. Once you provide the card info, the scammer uses it immediately, leaving you with nothing.
Tip: No legitimate company requests payment via gift cards. Be wary of such demands.
4. Fake Prize Scams: Fraudsters may reach out to claim you’ve won a prize, but a “small fee” must be paid with a gift card to receive it. This common ploy is used to trick victims into sharing their card details.
Tip: Legitimate contests don’t require upfront fees for prize claims, especially not via gift cards.
5. Number Stealers: Scammers use devices to scan magnetic stripes on display cards in stores. They wait until the cards are purchased, check the balance, and quickly drain the funds.
Tip: Retailers should consider PINs, RFID protection, and keeping cards behind the counter to prevent this type of fraud.
6. Corrupt Cashiers: In some cases, the cashier may activate a card but switch it with a different one, keeping the activated card for personal use.
Tip: Always check the gift card handed to you and ensure it’s the one activated.
7. Charity or Clergy Scam Calls: Scammers posing as clergy or charity representatives may request donations via gift cards. They can be very convincing, making it hard for people to say no, especially during the giving season.
Tip: Verify all charitable requests, especially those asking for donations via gift cards, which is not a common request by legitimate charities.
8. Fake Activation Websites: Some scammers create fake sites that look like official gift card activation or balance-check portals, capturing your card information as soon as you enter it.
Tip: Only use official retailer websites for gift card transactions.
9. Discounted Cards on Online Marketplaces: Gift Cards sold at discounts on sites like Facebook Marketplace and Craigslist are often scams, with scammers selling inactive or worthless cards.
Tip: Buy gift cards only from reputable retailers to avoid fraud.
How to Spot a Gift Card Scam
High-Pressure Tactics: Scammers create a sense of urgency to push victims into fast decisions, often threatening consequences if the card isn’t purchased or activated immediately. This tactic is common in scams where the scammer impersonates a government official or a debt collector.
Unusual Payment Requests: Legitimate organizations don’t ask for gift cards as payment. If someone does, it’s likely a scam.
Requests for Card Information: Scammers posing as company representatives may ask for gift card numbers, PINs, or security codes, supposedly to resolve an issue.
“Too Good to Be True” Offers: If an offer or prize seems unbelievable, it’s likely a scam. Scammers use enticing offers to lure in victims.
What to Do if You or a Customer Is Scammed
Listen and Show Empathy: Acknowledge the frustration of the victim and show willingness to assist.
Gather Details: Collect details about the scam, including transaction dates, amounts, and any communications with the scammer.
Investigate: Review transaction records and check for any data to validate the customer’s report.
Encourage Reporting: Advise the victim to report the scam to their bank, law enforcement, and the retailer for further support.
Strengthen Security: Enhance fraud prevention strategies, update systems, and improve authentication processes.
Advice for Users if They’re Scammed
If you’ve been scammed, it’s essential to document everything:
Contact the Gift Card Issuer: Reach out to the retailer that issued the card and provide receipts and any relevant information. Some retailers may freeze the card balance or help track fraudulent use.
File a Police Report: Report the incident to local law enforcement, which may be required by the retailer to take action.
Notify the FTC: Submit a detailed report to the Federal Trade Commission (FTC), which tracks scam data to support enforcement efforts.
Contact the State Attorney General: Your state’s Attorney General may assist if there’s a pattern of similar scams.
Build a Secure Gift Card Program with 99minds
With 99minds, businesses can establish a secure and reliable gift card program that includes:
Gift Card Management: 99minds provides comprehensive tools to efficiently create and oversee a gift card program.
Program Design: Align your program with business goals, using customizable templates to reflect your brand and setting clear terms.
Security Implementation: 99minds offers unique card numbers, PIN codes, real-time tracking, and data encryption for strong fraud protection.
Channel Integration: 99minds’ API allows seamless integration with online and physical stores, making gift cards easy for customers to buy and redeem.
Promotion: Email and social media promotions can help attract customers. Offering bonuses on gift card purchases can boost interest and sales.
Performance Monitoring: Track sales, redemption rates, and customer feedback, then make data-driven adjustments to improve the program.
Customer Support: Provide responsive customer support to resolve any gift card issues promptly.
Final Words on Gift Card Scams
It’s essential to stay cautious and informed to protect yourself from gift card scams this holiday season. Keep in mind that legitimate businesses or government entities will never request gift card payments. If you’re considering setting up a gift card solution for your business, reach out to 99minds to learn how we can help you build a safe and secure gift card program.
For further insights, visit our detailed guide on gift card scams.
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