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Fairfield, CT

CT BBB Study: Gift Card Scams

 

CROMWELL, Conn. — Gift cards have become a multibillion-dollar industry, a gift that always fits and stands up to social distancing. Worldwide, consumers spent billions on gift cards last year. However, that total comes with an asterisk -- it includes the gift cards on which scammers increasingly rely to extract payment from their victims.
 
An in-depth investigative study by Better Business Bureau (BBB) finds an increase in reports of scams involving gift cards, with hundreds of millions of dollars in losses over the last few years. The study -- Gift Card Payment Scams: BBB Reveals Why Scammers Love Gift Cards -- looks at the scope of fraud involving gift cards as a payment method, the way various cards work, the scammers who exploit them, the efforts to combat the scams and the steps that the industry can take to further tackle this scourge. Read the full study here.
 
According to the study, payment by gift card is a common thread among many scams that have been the subject of previous BBB studies,  including government impersonators, business email compromise frauds, tech support frauds, romance scams, fake check scams, prize/sweepstakes scams, and online sales of nonexistent vehicles.
 
“If you’re asked to make payment via gift card for whatever reason, you almost certainly are dealing with a scam,” said Luke Frey, BBB Serving Connecticut spokesperson. “Gift cards don’t carry the same protections as credit or debit cards, so funds spent on gift cards are funds you cannot get back.”
 
   
   
Available data suggests that gift card payment scams are growing fast. The losses reported to BBB Scam Tracker for this payment type nearly tripled between 2017 and 2020, with a median loss of $700 in 2020; consumers over 65 were more likely to lose money than younger consumers.
 
Typically when gift cards are requested as payment in scams, the scammer instructs the consumer to buy a gift card -- or several -- and either read the numbers on the back over the phone or send a photo of the numbers on the back. If victims ask questions about why gift cards are being used for payment, scammers invent a plausible excuse, such as that the government has recently entered a contract with a gift card company to handle transactions.
 
Commonly requested gift cards include eBay, Google Play, Target, iTunes, Amazon, and Steam, an online gaming company. The scammer might promise to reimburse the consumer later or may send a check in advance for the consumer to deposit. In reality, the funds do not materialize or the check is invalid, and the consumer has lost the funds forever.
 
Gift cards cannot be tracked easily and do not carry the same legal protections as credit or debit cards, making them an attractive option for scammers.
 
Red flags to know and avoid include:
  • Government agencies requesting payment. No government agency requests money through gift cards.
  • Statements that buying gift cards is a safe way to make a payment. Providing the numbers for a gift card is like sending cash, and the money is rarely recoverable. Gift card payment requests are a big red flag for a scam.
  • Keep the receipt when buying a gift card. Keep the physical card as well. These may help prove that the card was paid for and activated if problems arise later.
  • Inspect the card carefully before buying it to be sure it has not been tampered with. Some scammers open the card to get the numbers on the back so that they can take the money when the card is later activated.
Who to contact if you are the victim of a gift card scam:
  • Victims should immediately notify the organization that issued the card as soon as they realize they have bought gift cards and provided the numbers to scammers, or have purchased gift cards with no balance on them. There is typically a customer service number on the back of the card.
  • Better Business Bureau - file a complaint with your local BBB if you lost money or report a scam online at BBB.org/scamtracker.
  • Federal Trade Commission (FTC) - file a complaint online at FTC.gov or call 877-FTC-Help.
  • Internet Crime Complaint Center (IC3) - file a complaint online at IC3.gov/complaint. 
To read more visit BBB.org/GiftCardFraud

 

 

 

 

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Submitted by Fairfield, CT

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