Gift cards are a fantastic way for consumers to give gifts to their loved ones, and their flexibility allow for increased spending by consumers – which retailers love.
Almost all major retailers offer a gift card of their own, and big box retail stores like Walmart, Target, Meijer, and others typically have huge racks of gift cards – including not just their own gift cards, but popular gift cards like Amazon, iTunes, Google Play, and others.
Gift cards are constantly rising in popularity – the market is bigger than ever before – and the outlook for the gift card industry is certainly bright.
However, the meteoric rise of the gift card industry has not gone unnoticed by more unsavory elements of the world.
Scammers are learning how to use gift cards to their advantage – using them as a way to demand payment for urgent emergencies while posing as a loved one, draining the balances of in-store gift cards as soon as they’re activated by using high-tech skimming technology, or even just using them for age-old phishing schemes by claiming that you’ve won a gift card – and demanding confidential, personal information if you want to get payment.
These are just a few of the ways that scammers have learned to adapt and rip off honest, hard-working people who are buying gift cards, and it’s time to fight back. In our article, we’ll take a look at three of the most common gift-card related scams, and what you can do to make sure that you don’t get tricked into falling for them, and how you can avoid being targeted by scammers.
So read on – and protect your personal information, your gift cards, and your rights as a consumer. Once you finish reading our article, you’ll have all the info you need to make sure you’re never scammed by a crook again.
Phishing is one of the oldest scamming and identity theft methods that there is – it’s been used by scammers for decades, ever since the invention of e-mail.
Essentially, phishing involves a criminal posing as anyone that they aren’t – a social club, an organization you belong to, a retailer at which you regularly shop, or even a friend, family member, or loved one.
By posing as a trusted, reputable organization or a known individual, the scammer tricks an individual into giving away private information – address, credit card information, or even very important information like Social Security numbers.
This information can be used in many ways – and most of them involve selling your information to other criminals on the black market, where it will be used to register for fraudulent credit cards, and to make phony purchases.
The Gift Cards Related Scam?
How is this related to gift cards? Well, it’s simple. Everybody loves gift cards! And as gift cards have become more popular, they have become a very common method by which retailers, organizations, and companies reward loyalty.
For example, organizations like WalMart often allow frequent shoppers to participate in online drawings for gift cards, or offer a gift card as a reward for taking a survey about their shopping experience.
Even companies like T-Mobile and other cell phone carriers have begun offering Visa and Mastercard e-Gift cards for rebates and other rewards.
Essentially, all this means that there are dozens of businesses which use legitimate gift cards for legitimate purposes – and scammers know it.
Because it’s common for gift cards and gift card-related offers to be emailed to consumers by companies that they trust, these scammers often pose as the companies in question.
For example – you might get an email from Walmart, informing you that you’ve been selected to win a gift card! Awesome! The email looks official, and even the email address looks legitimate! All you have to do is verify some personal information, and they’ll release the gift card right to you!
So you enter in your address, SSN, or other personally-identifiable information. But there’s a problem – after you do so, nothing happens. There is no gift card – there never was a gift card.
The scammers who conduct these scams use high-tech methods of “spoofing” emails and email addresses to pose as legitimate companies offering rewards of gift cards in exchange for your personal information – and once you give up your personal information, you’re at risk for identity theft, and a myriad of other dangers.
How Can I Avoid The Scam?
Avoiding the scam simply means being able to pick out the spammy emails from legitimate emails – and avoiding entering any personal information if you get one. Here are a couple of tips on how to avoid these emails:
- Use a modern email client like Gmail. The spam filtering in Gmail and other modern email clients are much better than older, ISP-provided emails, and even Microsoft Outlook. They can filter these spammy requests and automatically delete them – you don’t even have to think about it.
- Be suspicious. Did you enter a contest? Take a survey? Is there any reason that you would be contacted for a free gift card? It’s possible that the email you got is legitimate, but you should be naturally suspicious. Check the email address, format, and other aspects of the email for irregularities that may be signs of a scam. When in doubt, delete the email – it’s not worth risking identity theft.
- If it sounds too good to be true, it is. Companies aren’t in the habit of handing out generous sums of store credit for no reason. If an offer sounds like it’s too good to be true, it is – and there’s a scammer waiting to collect your information and sell it.
By following these three guidelines, you can avoid email gift card phishing scams.
“Skimming” Gift Cards In-Store
Skimming is another old scamming technique – but it’s been updated for the modern, gift-card driven economy.
At its most basic, skimming is the act of using a POS system or credit card reader to read the numbers off of a card illegitimately. Many people don’t know this, but the magnetic stripe (or EMV chip, for new cards) on your credit cards contains all of the numerical information related to your credit card – and if it’s read by a scammer, your card can be used illegitimately.
These “skimmers” can take the form of ATMs, gas pump terminals, or even in-store POS systems, though they are rare.
Skimmers can also be used by criminals independently – they can use a skimmer at home to read the information on a stolen card at their leisure.
What Is The Scam?
The primary problem with stealing credit card and bank card information is that it’s extremely easy to track – banks and card companies can easily see where and when stolen credit cards are being used, and cancel them – or even catch the crook.
Criminals know this. So they’re turning to gift cards instead – because these gift cards are usually proprietary, there’s no easy way for law enforcement to track their use, making them an ideal target for skimming.
Here’s how it works. If a store has gift cards that have their numbers and PIN printed plainly on them, a thief can simply walk into a store, grab some gift cards, and record their information by taking notes, or a picture. They can even scratch off the PIN sticker on the back of a gift card, and replace it with a new one – nobody will be the wiser.
If the store does not have the numerical information about the gift card printed on the card itself, that’s no problem – they can use their “skimmer” to read the magnetic information off of the card’s magnetic strip. Advanced scammers can even “clone” these cards, by creating a new gift card with duplicated information on the magnetic strip.
They’ll just walk out with some bundles of gift cards, go home, and get all the information they need from the card. Then, they’ll replace the cards in their original packaging, with nobody the wiser.
Then, all the scammer has to do is wait. They’ve replaced the cards – and though they are worthless until activated, it’s only a matter of time before somebody buys one. By using online balance checking services for large retailers, these scammers can keep track of which cards have been activated, and drain the balances as soon as they’re active.
This method of scamming is growing in popularity because it’s hard to track – it’s rare for a gift card recipient to spend it immediately, so by the time they get around to using their card, it may be too late.
How Can I Avoid The Scam?
Be cautious when you buy gift cards. Here are a couple quick tips.
- Buy gift cards that are stored behind the counter. Gift cards that are stored behind a retail counter are much less likely to be compromised – the thief can’t simply reach past the cashier. These cards are much safer, and much less likely to be targeted in these scams.
- Change your PIN, if you can. Some gift cards can have their PINs changed online – if you can do so, you should. Just make sure you update the recipient with the new PIN. Without a PIN, scammers can’t use your card, so this blocks them from draining your funds.
- Buy gift cards online. You can either buy a physical card online, or even have a digital code emailed to you. Thieves can’t get their hands on these cards, so they’re totally secure.
Phone Scams – IRS, And More!
Phone scams are another age-old scamming method. Usually, a scammer will get a hold of your phone number somehow, and then call you pretending to be someone with a position of authority – and try to convince you to pay them for something you didn’t do, or even threaten a loved one if you don’t pay up.
What Is The Scam?
The most popular version of this scam took place late last year, in 2016. A shell company in India set up multiple call centers in the city of Thane – Mumbai, filled with men pretending to be representatives of the IRS.
These scammers would then call hundreds of thousands of Americans, and if they managed to get you on the line, they would inform you that they worked for the IRS, that you owed a large amount of money in back taxes, and that law enforcement was on its way to your house – unless you cooperate with their demands.
They then demanded payment. Sometimes in the form of bank account wire transfers, but more often in the form of gift cards – iTunes gift cards were especially popular as a payment method.
The urgency and the authority of the scammers often fooled people into complying, against their better judgement. After all, it’s better to send $50 in iTunes credit than it is to end up in jail, right?
It’s estimated that victims of this scam and others like it have made millions of dollars by scamming honest Americans who believed they were in trouble with the IRS.
How Can I Avoid The Scam?
In this case, you’re unlikely to be targeted by these particular scammers – luckily, they were brought to justice. But phone scams are still common, so we’ll give some basic advice on avoiding them and understanding how to recognize them.
- Take a breath, and think. Do you owe back taxes to the IRS? Do you have a relative in trouble with somebody? Why would somebody be calling you about giving them gift cards in exchange for something? These scammers take advantage of panic – before you know it, you comply with their demands. If you take a deep breath and think about your situation, you’ll be able to think more clearly – and recognize a scam.
- The IRS will never call you to demand payment. This is not how the IRS works. If you owe back taxes, you likely already know it – and you would have been notified already, most likely by certified mail.
- When in doubt, hang up. These scammers want to keep you on the line – they want to convince you that you’re in trouble. Don’t fall for it. Hang up if you think it’s a scam – chances are, they won’t call back.
- Never give personal information to anyone who calls you. Even if they’re not looking for an immediate payment, a caller may ask you to verify information about yourself. Don’t do so – they can use this information to steal your identity.
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