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Consumers are Vulnerable to Gift Card Scams During Holiday Season; Here's how to Keep Them at Bay

According to the Federal Trade Commission (FTC), in 2022 alone, consumers reported over 48,800 cases of gift card fraud, resulting in losses exceeding $228 million
PUBLISHED DEC 24, 2023
Cover Image Source: Pexels I Photo by: Godisable Jacob
Cover Image Source: Pexels I Photo by: Godisable Jacob

As authorities warn of financial scams in various forms during the festive season marked by shopping events, it's easy to believe that you won't be a victim. However, gift card scams are prevalent, and unsuspecting individuals have been losing money towards the end of the year. According to the Federal Trade Commission (FTC), in 2022 alone, consumers reported over 48,800 cases of gift card fraud, resulting in losses exceeding $228 million. This article takes a look at common gift card scams, and helps consumers identify them before taking crucial steps to cut their losses.

Gift card scams come in many shapes and sizes. Some scammers trick individuals into purchasing gift cards with zero balances, while others compromise card numbers. One of the most prevalent schemes involves scammers posing as authority figures, relatives, or service providers, to create a sense of urgency that forces victims to buy gift cards and share the card details.

Image Source: Pexels I Photo by: Sora Shimazaki
Image Source: Pexels I Photo by: Sora Shimazaki

Scammers claim to be from government organizations like the IRS or Social Security Administration, threatening arrest if money isn't paid immediately. They also impersonate a family member or friend, and claim to be in a crisis with a need for urgent financial assistance.

In some cases, victims are informed they've won a substantial prize but need to pay a fee to claim it, while sometimes scammers even pose as tech support from reputable companies, insisting on payment in gift cards. Individuals also receive threats from fake utility company representatives, demanding immediate payment in gift cards to avoid service disconnection.

The scammers typically instruct victims on specific gift cards to purchase and then coerce them into sharing the card numbers and PINs, which allow the scammers to swiftly drain the loaded funds. Gift cards from popular retailers like eBay, Target, and Amazon are often requested.

Image Source: Pexels | Photo by Tara Winstead
Image Source: Pexels | Photo by Tara Winstead

Be wary of unsolicited texts, emails, social media messages, or calls from unfamiliar sources, especially if they promise something too good to be true. Reputable entities and government agencies won't demand payment in the form of gift cards.

Take a moment to verify urgent messages, especially those claiming to be from family or friends, and avoid sharing sensitive information on social media or other platforms, as scammers can exploit even seemingly harmless details like email or phone numbers.

Cover Image Source: Freepik | Diana Grytsku
 Image Source: Freepik | Diana Grytsku

Recovering money from a gift card scam can be challenging, given that gift cards function like cash. However, swift action improves your chances. One can contact the gift card company immediately, providing proof of purchase or card details to verify the situation, and then ask the firm to return the money. But, some companies may freeze funds, making a refund possible.

If you used a credit card for the gift card purchase, additional protections may apply, such as $0 fraud liability. Contact your credit card issuer, report the incident, and inquire about possible remedies.

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