Gift cards are convenient, easy to purchase and popular for everything from birthdays to holidays. But that convenience has also made them an attractive tool for fraudsters. Unlike many other forms of payment, gift cards can be difficult to recover once the funds have been taken.
The most important rule to remember is simple: Gift cards are for gifts, not payments. If someone unexpectedly tells you to purchase a gift card and provide the card number or PIN as payment, there’s a strong chance you’re being scammed.
How gift card scams work
Gift card scams can take many forms, but they often rely on the same basic strategy: create a sense of urgency, convince you to purchase a specific gift card and then obtain the card information from you.
A scammer might impersonate a government official and claim you owe a debt or fine. Someone posing as your utility company may threaten to shut off your service unless you pay immediately. A fraudster could impersonate your employer and ask you to purchase gift cards for a business purpose. Other scams involve fake tech support, phony sweepstakes winnings, online purchases, romantic relationships or supposed investment opportunities. The details change, but the warning signs are often remarkably similar.
The person wants payment by gift card: legitimate government agencies and reputable businesses do not demand payment through gift cards. The scammer is just creating a sense of urgency – they don’t want you to have time to stop and think or consult someone you trust. If you’re being told that something terrible will happen unless you purchase a gift card immediately, take a step back.
They’re telling you exactly what to buy: A scammer may instruct you to purchase a particular type of card, such as an eBay, Target, Google Play or iTunes card, and may even tell you which stores to visit. They may ask you to purchase several cards at different locations to avoid raising suspicion. If any of these situations occur, stop; don’t purchase the cards or provide the information.
Protect the card like cash
Once money has been loaded onto a gift card, the card number and PIN can essentially function like cash. Never give or text those numbers to someone who contacts you unexpectedly.
If you have already purchased a card because of a suspected scam, don’t provide the card number or PIN. Contact the gift card company using the legitimate customer service information associated with the card and report the suspected fraud. If you’ve provided the information or money has already been taken, contact your financial institution and the appropriate authorities as soon as possible.
It’s also important to protect cards before they’re even activated. When purchasing a physical gift card, inspect both the card and its packaging for signs of tampering. Look for scratched PIN coverings, loose activation stickers or anything that appears altered. Be cautious with cards displayed prominently in stores, where criminals may have easier access to them.
After purchasing a card, verify its balance and keep your receipt. Consider using the card relatively soon rather than leaving it unused for months.
Be careful when buying or selling gift cards online
Unused gift cards can sometimes be exchanged through legitimate gift card exchange services, but consumers should understand what they’re getting into. A $100 gift card sold through an exchange will generally result in a payout below the card’s face value, and the amount can vary depending on the service and demand.
If you’re buying a previously owned gift card, look for an exchange that verifies balances and offers a post-purchase guarantee. Review the site’s policies for fees, expiration dates and how sellers receive their payments.
Avoid buying or selling gift cards directly with strangers through social media, classified listings or other informal marketplaces. The lack of verification or buyer and seller protections can make these transactions particularly risky.
When in doubt, stop and verify
Gift card fraud is effective because scammers often create situations that feel urgent and legitimate. A phone call may appear to come from a familiar organization. An email may appear to have come from your boss. A social media message may even appear to come from someone you know.
Before taking action, stop and verify the request independently. Don’t use a phone number, link or contact information provided in a suspicious message. Instead, contact the organization using a trusted source of information. And remember: If someone asks you to pay a bill, fine, debt, purchase or fee with a gift card, that’s a major red flag.
Treat gift cards the same way you would treat cash. By slowing down, recognizing the warning signs and protecting the card information, you can make it much harder for fraudsters to turn an everyday convenience into a costly scam.