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3 Dangerous Gift Card Scams Targeting Americans

How to protect against scammers draining cash balances from gift cards

by Kurt Knutsson

New crafty gift card scam artists are doubling down on old tricks that work to steal money off gift cards and using new schemes to trick you out of your entire cash balance on a gift card.

These gift card crimes are so pervasive that the Federal Trade Commission says 1 in 4 people reporting money scams are related to a gift card.

Now more than ever you need to be cautious when buying, giving, receiving, and using gift cards.

Here’s how these thieves are tricking thousands of people out of hard-earned cash.

 

fake amazon labels on gift cards

Gift Card Trick #1

The old-fashioned scam has a criminal start at the retail store.

  1. They scratch off the security strip on the back to learn the pin code
  2. then cover it back up with a makeshift label or sticker
  3. scammers use software that checks gift card balances until cash gets loaded onto the card
  4. before you have given the card to your gift recipient, the crook has drained the card of all its cash

This gift card nightmare happens to 1 in 5 gift card recipients surveyed by the AARP.

 

man answering phone

Gift Card Trick #2

Prize giveaway winner gift card scam.

  1. You get a call, email or text saying that you have randomly won a gift card from a credible-sounding organization
  2. In order to have the gift card sent to you, they just need some personal details or trick you into clicking a form to claim the prize gift card.
  3. Instead, the scammer infiltrates your financial information and in some cases installs dangerous malware on your device without you ever knowing it
  4. This is one of the most damaging forms of gift card scams that evolves into a grand identity theft case difficult to stop

 

man entering gift card into computer

Gift Card Trick #3

Retail or auction site sellers ask for you to pay with a gift card.

  1. They may even sell it to you saying that the $22 item you are buying can be paid for with a gift card they are selling
  2. Today is your lucky – or truly unlucky – day when they claim that gift cards are on sale offering you a $200 card for only $150 for this special promotion
  3. Don’t believe. It is the latest gift card scam
  4. What happens next is the scammer sells you the gift card taking your credit card number, then drains the balance of the gift card after your $22 transaction. You get a double wallop from these crooks!

 

Tips to Spot a Gift Card Scam

  • Retail gift card packaging is altered in any way.
  • Gift card security strip on back of card has been scratched off or a phony label placed over it.
  • An online seller asks to be paid with gift cards instead of secure apps like Paypal, Venmo and traditional credit card.
  • Do not respond to unsolicited calls, voicemail, texts, social media messages or email related to gift cards.

 

man entering gift card into computer

How to Safely Give and Receive Gift Cards

  • Buy gift cards online instead of physical cards directly from the store, not third parties.
  • Avoid gift card racks at retail stores like the grocery store. If you still want to buy one at the store, dig back into the pile without taking the first ones off the rack. Inspect them like a detective before you buy to make sure they are unaltered.
  • Register the gift card directly with the retailer if offered which also helps track card balance.
  • Never engage in any gift card transactions from callers making unusual claims. It is likely a scam.
  • Avoid buying gift cards from online auction sites like eBay.
  • Never provide personal financial information beyond a method of payment to anyone offering gift cards in-store or online.

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