As the most popular holiday gift, gift cards — millions of them — will be exchanged this season. Unfortunately, though, they often wind up in the hands of scammers.
Because they provide an easy and virtually untraceable payoff, and consumers have heeded well-publicized warnings about the risks of sending payments by wire transfers and prepaid debit cards, gift cards have become the preferred payment method among fraudsters. Among the reigning gift-card scams:
Payment ploys. Whether the claim is that you owe back taxes to the IRS, missed jury duty and face arrest, didn’t pay your utility bill, or umpteen other settle-now-or-else threats, phone calls from swindlers behind these and other top scams often demand payment with iTunes gift cards (Amazon gift cards are also gaining in popularity).
The ruses may vary — including scammers posing as grandchildren in distress or computer tech-support personnel — but the gotcha is the same: After threatening dire consequences, the impostor persuades the target to purchase one or more iTunes cards (online or at a store), load money onto them and then provide the 16-digit card codes via phone, email or text message. As soon as money is loaded and the code is revealed, the card’s value is drained, traded or sold on the black market.
What to know: No government agency (including the IRS or local police) demands payment by gift cards; indeed, it’s unlikely that gift cards are even accepted as payment by most entities other than their issuers, like iTunes or Amazon. So assume that any requests for these payments are from con artists.
Rack ripoffs. In this longtime ruse, thieves carefully open packaging to copy numbers from gift cards that haven’t been sold or activated by a cashier. After placing the cards back on racks for purchase, crooks periodically check the issuer’s toll-free number to determine when a card is activated and for what amount. Once unsuspecting customers buy the cards, thieves can make online purchases for the purchase amount using only their bar codes. Some crooks even use tiny card readers to scan electronic information from the cards’ magnetic strip and then replace the cards; once a card is activated, swindlers can clone a duplicate card for an in-store shopping spree.
What to know: At stores, to reduce the risk of purchasing gift cards that have been tampered with, buy cards at a counter staffed by employees instead of getting them off an unmanned rack. If you must buy from a display rack, choose cards toward the back, and check packaging to ensure it hasn’t been opened. Also, always get a receipt for yourself as well as for the card recipient. Most retailers can track where their gift cards were purchased, activated and used; so if yours has been hijacked, having a receipt will usually qualify you or the recipient for a refund or replacement.
“Free card” fraud. Especially during the holiday shopping season, claims of free gift cards are popular bait on social media, in text messages and in email spam.
What to know: Before believing any free offer, check the manufacturer’s or retailer’s website. If there’s no mention of the offer there, assume that the no-cost card is part of a bogus contest or giveaway aimed at installing malware via “redeem here” links, at collecting cellphone numbers to cram accounts with unwanted services, or at getting you to take surveys that collect sensitive information that could be used for identity theft.
Resale ripoffs. Because gift cards are the most-given gift (but not always wanted by recipients), there’s a thriving resale market — some legit, some fraudulent. Most experts suggest that you avoid buying or selling unused gift cards on Craigslist or auction sites such as eBay because there’s a greater likelihood of getting scammed. The most common con for buyers is purchasing already-redeemed gift cards or paying for cards that are never delivered. Gift-card sellers may receive payment, but after they send the PINs associated with the cards, the FBI warns, crooked buyers may dispute charges after redeeming the cards, claiming they were fakes or never delivered.
What to know: Stick with reputable online gift-card exchanges such as GiftCardGranny.com, Cardpool.com and Raise.com, which buy unused cards at a discount of their face value and resell them at a profit but at a still-reduced price.
For information about other scams, sign up for the Fraud Watch Network. You’ll receive free email alerts with tips and resources to help you spot and avoid identity theft and fraud, and keep tabs of scams and law enforcement alerts in your area at our Scam-Tracking Map.
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