June 16, 2024


Dec. 3, 2023, 12:10 p.m. ET

Gift cards are a popular and convenient present during the holiday period but can often be a hotbed for fraudsters aiming to steal your money or personal information.

According to the Better Business Bureau (BBB), there has been a 50% increase in reported gift card scams compared to the previous year.

So, what are the tricky tactics fraudsters and cybercriminals employ to deceive you? How can you identify and avoid their manipulative ploys? Here are five of the most prevalent gift card scams to keep an eye out for.

1. The Display Rack Gift Card Scam

One of the newer scams involves tampering with gift cards displayed at retail outlets. Fraudsters record the activation code or place a customized barcode sticker over the actual barcode. This enables them to covertly load cash onto their card right after you’ve bought the gift card. Hence, the gift card you or your recipient attempts to use will be useless or drained of its funds.

How to Avoid This Scam

Inspect the gift card packaging before purchasing it. Check for signs of tampering such as torn or resealed wrapping or stickers placed over the barcode or card number. Also, prefer picking a card from the back of the rack since scammers often put their compromised cards at the front of the display.

2. Impersonation Gift Card Scam

Another prevalent trick is the impersonation scam where fraudsters pretend to be someone you trust or know, such as a family member, a company, a romantic interest, or even the government. They contact you via phone, email, text, or social media and craft a fabricated story or emergency requiring you to send them money urgently.

They’ll request you to buy a gift card or several gift cards and subsequently send them a picture of the card or the card number. Once they have the gift card information, they vanish with your funds and sever all contact.

How to Avoid This Scam

Never send money or gift cards to anyone you haven’t met personally or don’t know. If someone is impersonating someone you trust, verify their identity by contacting that person directly through a separate channel. Don’t trust caller IDs as they can be spoofed. Don’t succumb to pressures, threats, or promises as scammers employ emotional manipulation to prompt you to act impulsively. And importantly, remember that no legitimate company or government agency will ever demand payment in the form of a gift card.

3. Resale Gift Card Scam

Yet another scam involves buying or selling gift cards on online platforms such as websites, apps, or social media groups. Scammers will offer to sell you gift cards at discounted prices or buy your unwanted gift cards for cash. However, they either send you a fake or depleted gift card or take your gift card information and money without giving you anything in return. They might also employ stolen credit cards or hacked accounts to buy or sell gift cards, potentially exposing you to fraud or identity theft.

How to Avoid This Scam

Buy or sell gift cards only from reliable sources, such as certified retailers, authorized resellers, or trusted friends and family. Don’t buy or sell gift cards from strangers online, particularly if their offering seems too good to be true. Refrain from sharing your gift card information or personal details with untrusted entities. Use secure payment methods that offer protection, such as credit cards or PayPal, instead of wire transfers, cash, or gift cards.

4. Phishing Gift Card Scam

A common scam during the festive season involves phishing, a form of online fraud designed to trick you into revealing personal or financial information. Scammers send a message that appears to be from a legitimate entity like a bank, retailer, or tech support service.

They allege an issue with your order, device, security, or account and ask you to verify your identity, update your information, or fix the problem. They then ask you to click on a link or open an attachment, or call a number and then ask for payment in the form of a gift card or supply them with your gift card information.

How to Avoid This Scam

Never click on links, open attachments, or call numbers from unsolicited messages as they may lead you to fraudulent or malicious sites or software. Don’t provide personal or financial information such as your passwords, PINs, account numbers, or gift card numbers to anyone who contacts you out of the blue.

Don’t trust messages that seem to convey urgency, fear, or pressure. They’re crafted to persuade you into acting rashly. If you’re unsure about a message’s legitimacy, reach out to the company directly through a verified website, phone number, or email.

Using antivirus protection will safeguard against scammers and hackers trying to pilfer your money and personal information using gift card scams, particularly through phishing. The best defense against clicking malicious links, visiting fake websites, and falling for phishing emails and text messages is to use antivirus protection.

Anti-virus protection on all your devices is crucial to resist and alert you of any malware on your system, which can ultimately shield you from hackers.

5. The loyalty program gift card ruse

This con involves reward schemes, where you receive points, discounts, or free gifts for your customer loyalty. Fraudsters pretend to be part of these programs that you’re a member of or eligible to join.

They claim that you’ve won a prize, a competition, or have a promotion and require you to pay a fee, tax or shipping cost to claim it. Then, they ask you to pay with a gift card or share gift card details with them.

Guarding against this fraud

Be skeptical of any unexpected offers or messages claiming you’ve won a prize, particularly if you don’t recall participating or joining any contests. Legitimate reward schemes will never require you to pay money or fees to receive a prize. Never reveal any personal or financial details, like passwords, account numbers, or gift card numbers to anyone who contacts you out of the blue.

Remember these tips for a relaxed and worry-free holiday season. juliasudnitskaya – stock.adobe.com

Don’t trust messages designed to trigger excitement, curiosity, or greed, as they’re engineered to make you act impulsively. If in doubt about a message’s authenticity, contact the reward program directly using a confirmed website, phone number, or email.

Tips for safer gift card practices

  • Opt for buying gift cards online directly from the store, instead of physical cards from third parties. You can also use these reliable sites and apps that give you cash back on all gift card purchases.
  • Steer clear of gift card racks at retail stores like supermarkets. If you must buy one from a store, delve deep into the stack without picking the top ones. Inspect them scrupulously before purchase to ensure they’re not tampered with.
  • If available, register your gift card with the retailer; this can also help keep track of card balance.
  • Avoid engaging in gift card transactions with callers making strange claims. It’s most likely a scam.
  • Stay away from purchasing gift cards from online auction sites like eBay.
  • Never share personal financial details beyond a payment method with anyone offering gift cards, whether in-store or online.
  • Make use of antivirus protection. Efficient antivirus software is crucial for defending against fraudsters and hackers attempting to steal your money and personal information using gift card scams, especially through phishing. The most effective protection against clicking on malicious links, phony websites, and phishing emails and texts is to install antivirus protection that is actively working on all your devices. This is your best chance to thwart and get alerts of any malware in your system, ultimately protecting you from hackers.

Victimized by a scam? Here’s what to do next.

Here are some steps to take if you or someone close to you falls victim to identity theft through gift card scams conducted by fraudsters or hackers:

1) If possible, regain control of your accounts, update your passwords and inform the account provider.

2) Browse your bank statements and checking account transactions to locate the erroneous activity.

3) Engage an Identity Theft protection service: such firms can monitor key personal information like your Social Security Number, phone number, and email and alert you if it is being sold on the dark web or used to create an account. They can also help freeze your banking and credit card accounts to prevent further unauthorized usage by criminals. Check out my review for Best Identity Theft Protection Services 2023 here.

4) Notify any breaches to authoritative agencies such as the Federal Trade Commission (FTC) and the gift card company.

5) Seek a lawyer’s professional advice before talking to law enforcement, particularly in cases of criminal identity theft, or when being a victim impedes your ability to secure employment or housing.

6) Apprise all three major credit tracking agencies and consider placing a fraud alert on your credit report.

7) Conduct a personal background check or demand a copy if that is how you discovered the misuse of your information by a criminal.

If you fall prey to identity theft due to a gift card scam, acting promptly to minimize the damage and prevent further harm is imperative.

Concluding thoughts from Kurt

Gift card scams pose a significant and escalating problem that could result in losses of money, personal data or both. However, by staying vigilant about the common types of gift card scams outlined here and adhering to these simple suggestions to identify and steer clear of them, you can safeguard yourself and your loved ones.