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'Tis the Season for Gift Card Scams: How to Avoid Being Suckered
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By Anya Ellis, Berkeley Correspondent
Published 4 months ago on
December 23, 2023

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The Better Business Bureau warns holiday shoppers to be vigilant of gift card scams, which are on the rise compared to previous years.

For years, scammers have targeted gift cards as payments because the cards function as cash. And, if the victim is persuaded to provide the 16-digit code and PIN, the money is instantly available to the scammers.

The creation of digital wallets and virtual gift card compatibility has increased the potential for theft, allowing money to be transferred worldwide in a matter of seconds. The BBB says it is seeing a 50% increase in reports of gift card fraud, and online shoppers are being hit the hardest.

Some scammers go to stores where gift cards are sold, recording numbers from the cards, and stealing the funds after the cards are loaded.

How a Common Gift Card Scam Works

However, most fraudsters attempt to convince individuals to purchase gift cards by impersonating online sellers, government or sweepstakes officials, and others. They convince victims that they have unpaid tax bills, owe fines, or have hacked accounts.

Richard in Tempe, Arizona, reported his experience to the BBB. Someone claiming to be from Amazon notified him of suspicious activity on his account that looked like possible identity theft. Then, they offered to connect him with someone working for the government.

“(They) put me in touch with a woman named Christine Wilson, claiming to be with the Federal Trade Commission, who had me draw $10,000 from my account,” Richard said. The woman, alleging that Richard’s identity was stolen and his accounts were at risk, instructed him to buy gift cards to put his money out of reach. Afraid of losing money, Richard purchased six gift cards and transferred them to the fake FTC agent.

“The FTC will never demand money, make threats, tell you to transfer money, or promise you a prize. Anyone who does is a scammer,” the commission says.

Fraudsters will request popular brands (Google, Apple Inc. Walmart) and general-use gift cards, such as Visa Vanilla or American Express. In both instances, they want the card number.

Virtually Impossible to Recover Money

Victims of credit card scams tend to incur greater losses, ranking third behind wire transfers and cryptocurrency, according to a 2022 BBB Institute for Market Trust report. Gift cards are treated like cash, which makes stolen funds hard to recover. Last year, no consumers reported to BBB Institute that they recovered money sent in a gift card scam.

Companies have begun partnering with authorities to track down these scammers due to the massive amounts of money lost. Prosecutors also are moving forward in these cases.

Last year, two men pleaded guilty to their involvement in a massive scam involving hundreds of victims and more than $200,000 in gift cards. In 2021, four people were indicted for their roles in a scam involving more than 5,000 gift cards stolen by an organized crime group called “Magic Lamp.”

How to Avoid Gift Card Scams

Here are tips to avoid falling victim to these scams:

  • Be on guard if anyone asks for payment through a gift card.
  • Stop immediately if a person claiming to be from the government asks for a gift card.
  • Contact the gift card seller, the actual business and government organization supposedly asking for money, and BBB to ask whether you are encountering a scam.
  • Keep all information related to purchase if scammed.

It would be best if you also looked out for:

  • Businesses or governmental agencies requesting gift cards
  • Cold calls about overdue tax payments
  • Paying for services or items with unrelated gift cards
  • Online sellers requesting gift cards as payment
  • Anyone asking to be sent a number or PIN over the phone or email
  • Promises to be reimbursed through check
  • A message from a work superior asking to purchase gift cards

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Anya Ellis,
Reporter/Researcher
Anya Ellis began working for GV Wire in July 2023. The daughter of journalists, Anya is a Fresno native and Buchanan High School graduate. She is currently at the University of California, Berkeley, majoring in film and media studies and minoring in creative writing. She plans to pursue her masters in screenwriting after graduating. You can contact Anya at anya.ellis@gvwire.com.

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