Gift Card Scams Are Becoming More Common — Tips & Strategies to Help

Gift card scams are a popular form of fraud, but there are steps you can take to protect your money. Here are tips for avoiding gift card scams.

Kathryn Underwood - Author

Apr. 10 2023, Updated 1:17 p.m. ET

The art of the scam has been around for millennia, and people just keep coming up with new and updated ways of taking your money or your identity. Along with bank alert text scams and texts offering to buy your house, gift card scams are on the rise. Here's how gift card scams work and how you can protect yourself — and others.

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The FTC reported that Americans lost $148 million in the first nine months of 2021 to gift card scams. As the Cybercrime Support Network reports, 2022 brought over $228 million in losses due to gift card scams.

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Gift cards are fine as gifts, but beware if required to pay for other items with gift cards.

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How do gift card scams work?

Gift card scams are actually fairly simple. Unless you're using your gift card at the actual retailer (physical or online) for which the card is intended, you should never pay with a gift card. The FTC puts it quite clearly: "As soon as someone tells you to pay them with a gift card, that's a scam."

The main reason gift cards are a preferred method for scammers is that they don't have the consumer protections built in that credit cards and debit cards typically have. There's no way of getting the money back once you've sent payment via gift card, whereas you could dispute a credit card charge that you didn't make.

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Lowe's gift cards
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If someone asks you to pay with a gift card, they may offer a story about how it's an urgent matter. The FTC explains they'll usually specify which retailer's gift card is acceptable (such as Walgreens, Walmart, or Target) and may even insist you buy cards from different stores. These are all red flags.

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You have fallen prey to a gift card scam once you provide the card number and PIN to someone else. That's the point of no return, when your money will be lost.

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Why are gift cards so popular with scammers? offers insight on why scammers love gift cards. Essentially, gift cards have fewer protections and can't be traced to an individual. Retailers don't care who uses a gift card, only that they use the card number and PIN. Gift cards are like cash: they can't be traced, disputed, or refunded. It's easier to carry out gift card scams than other types because of the anonymity.

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When paying online, be sure to verify the person you're sending payment to.

Check out these tips for avoiding gift card scams.

Some of the types of gift card scams include:

  • a person claiming to be from the IRS, your bank, or another institution
  • someone selling gift cards at unbelievable discounts
  • a supposed family member needs immediate financial help
  • someone sends you a check above the expected amount and tells you to pay the difference back on a gift card
  • you've won a prize but must pay to receive it
  • the gift cards can move funds or protect your balance
  • romance scams on dating sites
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You should also pay attention when buying physical gift cards in stores. CSN has some suggestions for how to ensure you don't lose money on gift cards. Check the card for any evidence of physical tampering (such as the missing protective stickers on the back or the PIN being visible). Using gift cards right away is also helpful.

Beware of online auction sites that claim to offer deep discounts on gift cards, as these could easily be stolen cards with little to no money left on the balance. Only buy gift cards from stores you know and trust, try to get them from behind the register or where cashiers can see them, and match the activation receipt to the card number.

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FTC building
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Who should you tell if you paid a scammer with a gift card?

If you already paid via gift card, you likely won't get your money back. But you should still report the scam to the issuing company and hold on to receipts and the original gift card. Depending on which retailer your gift card came from, check that company's customer support information to find out how to report and deal with a gift card scam.

Also, the FTC relies on consumers to report scams whenever they occur, even if you caught the scam before you paid. You can report a suspected fraud at Victims of scams should also report them to their state's attorney general, and if you actually lost money, contact the local police department.

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