Gift cards have become a multibillion-dollar industry, a gift that always fits and stands up to social distancing. Worldwide, consumers spent billions on gift cards last year. However, that total comes with an asterisk - it includes the gift cards on which scammers increasingly rely to extract payment from their victims.
An in-depth investigative study by the Better Business Bureau (BBB) finds an increase in reports of scams involving gift cards, with hundreds of millions of dollars in losses over the last few years.
Available data suggests that gift card payment scams are growing fast. The losses reported to BBB Scam Tracker for gift card payment types nearly tripled between 2017 and 2020, with a median loss of $700 in 2020. Consumers over 65 were more likely to lose money than younger consumers. The Federal Trade Commission (FTC) reports that roughly one in four people who lost money to a scam not related to an online purchase paid with a gift card, with reported losses of $245 million since 2017.
Typically when gift cards are requested as payment in scams, the scammer instructs the consumer to buy a gift card - or several - and either read the numbers on the back over the phone or send a photo of the numbers on the back. If victims ask questions about why gift cards are being used for payment, scammers invent a plausible excuse, such as that the government has recently entered a contract with a gift card company to handle transactions. Commonly requested gift cards include eBay, Google Play, Target, iTunes, Amazon, and Steam, an online gaming company. The scammer might promise to reimburse the consumer later or may send a check in advance for the consumer to deposit. In reality, the funds do not materialize or the check is invalid, and the consumer has lost the funds forever.
Be wary of government agencies requesting payment. No government agency ever requests money through gift cards. Keep the receipt when buying a gift card. Keep the physical card as well. These may help prove that the card was paid for and activated if problems arise later.
Inspect the card carefully before buying it to be sure it has not been tampered with. Some scammers open the card to get the numbers on the back so that they can take the money when the card is later activated.