It’s a given – if money is involved, scammers are involved. And scammers love gift cards. That’s because gift cards are tough to trace, and not subject to the same regulations as credit and debit cards.

Yet, gift cards are a great way to reward someone, and give the friend, family member, or employee the means to purchase a truly-wanted gift using the pre-loaded monies on the card.

Here’s how to avoid scammers when you buy gift cards.

What Is a Gift Card Scam?

Basically, a gift card scam occurs when someone loads the card with money, and a scammer finds a way to access that money. If you or someone you know is a victim of a gift card scam, the Federal Trade Commission wants to know about it. The FTC reports that gift card scammers account for 26% of fraud reports the agency investigates.

The FTC noted that reports of gift card scams where people have lost money have tripled since 2017. Many times the scam takes place during the holiday season.

READ MORE: Now is the Time for Local Small Business to Consider Offering Gift Cards

How Do Gift Card Scams Work?

There are two main ways that scammers commit fraud using gift cards.

Someone asks you to put money on a gift card as a way to pay fees, services or bills, such as monies owed to a utility company or government agency.
Someone finds a way to learn the numbers on your gift card and uses that gift card information to pay for purchases.

What Gift Cards Are Used in Scams?

Any gift card can be hacked by scammers. No company is exempt, although the “heavy hitters” such as Amazon, eBay, and Google are most frequently targeted. Here’s our list:

Most Common Targeted Gift Cards

1. eBay Gift Card – Scammers often sell gift cards on online auction sites. You’ll pay less for those cards, but as the saying goes “You get what you pay for.”

2. Amazon Gift Card

3. Apple Gift Card

4. Google Play Gift Card – The Google play card is a frequent target.

5. Walmart Gift Card

6. Vanilla Gift Card

7. Target Gift Cards

8. iTunes Gift Card – The iTunes card is frequently targeted by scammers who are especially adept at nabbing gift card balances.

How to Avoid Gift Card Scams and Gift Card Fraud

As we stated, gift cards are an awesome way to give a gift. Here’s how to continue to use them, while being aware of our cautionary tips:

1. Know that there is never a time that the IRS, the social security administration or any government agency would contact you by phone, text or email and request gift cards be sent in lieu of payment, to pay an owed amount. If you owe money to a government agency or need to pay taxes, contact the agency directly.

2. Similarly, be leery of phone calls, texts or emails from such agencies or utility companies, such as your power company. If you get a phone call, email or text message about utility bills, call the company directly.

Such calls are a definite scam alert since no company wants to be paid for services with a gift card in the real business world.

3. Be cautious when you’re purchasing gift cards from a wall of them at a store, which is common in the retail industry. It’s possible that scammers have used a magstripe reader to scan the card’s ID number. A scammer will take a handful of cards from the display and use the magstripe reader to download the numbers.

Once they have the gift card number, all they need is the card numbers pin – make sure the pin on the card you purchase has not already been scratched off. After reading the card number the scammer may also scratch off the pin, and make note of it. The pin is like the security code on a credit card.

4. Watch the cashier person when you’re putting money on a card. That’s a scam that can happen in stores when you buy gift cards. The cashier takes the “loaded” card to activate it for you but switches it with an “empty” different card where no monies have been paid on it.

5. Never provide gift card numbers to someone you don’t know. Remember that gift cards are to be redeemed at the time of purchase, whether in stores or online. The purchaser provides the card number at the time of purchase.

6. Report any instances of fraud to the FTC and also make a police report. Make a claim against the company as well.

7. If you’re a gift card recipient, use the card promptly, within the first nine months.

8. Never buy gift cards singly or as a batch on eBay, Facebook marketplace or any online auction site. Those are common gift card scams.

9. When you get an email, text or phone call that claims you’ve won a prize or cash, don’t believe it. That’s a common scam, especially with mass emails sent by professional scammers, according to a new report from the FTC.

In fact, by clicking open that email or text, you may be opening the door not only to malware but also to identity theft.

Can Gift Card Scams Be Traced?

Regrettably, no, they are very difficult to trace. And scams involving them can also be a source of identity theft. Those are two of the main reasons that scammers love gift cards. Gift cards are hard to trace and a gateway to identity theft.

The gift cards don’t carry the same legal protections that credit and debit cards do.

Can You Get Your Money Back From Gift Card Scams?

You can’t dispute a loss of money as you can with a debit or credit card. Victims report that Amazon has been responsive in returning funds stolen from gift card scams.

Even if it’s unlikely that you’ll get your money back, it’s important to report the theft to the FTC and also to your local police department. You can also make a report to the store or company which issued the card.

Image: Envato

This article, “How to Avoid Gift Card Scams” was first published on Small Business Trends