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Beware of Gift Card Scams

December 26, 2019

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We've all been on the receiving end of gift cards for the holidays. After all, they are a convenient present for when you're not sure what to get your friend or relative, but still need to get a gift for them.

Unfortunately, what should be something harmless can often be used by scammers as a way to defraud people out of their money. After all, a gift card is just like cash (i.e. any misuse is hard to trace) and, unlike credit cards, there usually aren't any resources customers can turn to when their gift card is stolen or used without authorization, so it is difficult to reverse a fraudulent transaction or get a refund.

Another common gift card scam occurs when someone poses as an attorney for a family member, claiming that family member is in legal trouble and needs help. The scammer will contact you via phone or email and ask you to purchase gift cards in specific amounts to pay them. Once you purchase these gift cards, the scammer will ask you to provide the card numbers and PINs so that the scammer can redeem the funds, leaving you out several hundred dollars.

Asking for gift cards to pay for legal issues and unexpected contact via phone or email are both big red flags that you might be the target of a scam. Remember: no business or government agency will ask you to make payments with gift cards. It's also a good rule of thumb to avoid making payments via phone or by wiring money, unless you can confirm the request is legitimate via other communications.

Also, be on the lookout for gift card scams when you're selling items. There is a common gift card scam that involves a person offering to purchase an item and sending you a check for more than the item's purchase price. They will then ask you to send back the difference in the form of a gift card. When you attempt to cash the check later, you will discover it is fake!

If you suspect you've been the victim of a gift card scam, you should report the situation to your local police department as well as notify the Federal Trade Commission (FTC), which tracks these scams. In addition, you should immediately report the scam to the merchant or company that issued your card and ask if they can refund your money. Most issuers have a toll-free telephone number to report lost or stolen cards, and you may get back the money left on the card or at least a portion of it (there is sometimes a fee for providing a refund). Be sure to keep the receipt and a record of the card number as you may need to provide this information when you report fraud.

Tips When Buying Gift Cards

Scammers asking for gift cards isn't the only way you can be defrauded. Here are some safety tips you should keep in mind when you're buying gift cards.

  • Avoid buying gift cards from unfamiliar websites. You should only buy gift cards from sources you know and trust.
  • If you are buying physical cards from a retailer, check before purchase. Sometimes criminals will scratch off the backs of the cards and steal the numbers and PIN.
  • Read the fine print. Make sure you understand the terms and conditions. Check for an expiration date, fees to use the card, and fees for dormant cards.
  • Register your card. This may help protect you in case the card is lost or stolen.

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