Published: 05/06/2020

Gift Card Fraud

Gift card fraud is committing fraudulent activity using gift cards over cash. Fraudsters can go online to monitor the gift card account’s activity at the retailer’s online portal and then strike once the cards are paid for and activated at the checkout register. The stolen goods typically are then sold online.

The popularity of gift cards makes them attractive targets for scammers.

What is gift card fraud

Gift card fraud can be broad and offers a number of advantages over fraud using traditional payment methods such as credit cards.

Examples include:

  • Anonymity/difficult to trace – you could buy a £200 iTunes voucher from a retailer with cash and then exchange that voucher online with someone for something else.
  • Ease of laundering – if you had someone’s stolen credit card details, you could buy a gift card and that would be difficult for the victim to get refunded.
  • Part of an account takeover – when accounts are taken over, gift cards can be bought as a way to funnel credit or funds out of that account.
  • Part of an online scam – gift cards might be used to convince people they have won something or there is a large amount of money due to them.

How gift cards get stolen

Gift card fraud happens when a victim’s information is stolen and then used to buy gift cards online, over the phone or in person at various retail outlets. The scammer will physically use your credit card details or personal information such as your name, address, date of birth and social security number to open new accounts with different financial institutions. Alternatively, they may even just steal an existing account that you have already set up through some other means such as phishing emails. In either case, the offenders are able to verify personally identifiable information (PII) about you for example through public records databases accessible on the internet.

Safely buying and using gift cards

Storing gift cards is a bit different from storing physical currency. There’s always the risk that they might get lost or damaged, so you need to protect their value before the next big holiday season. Two popular storage options are:

Handwritten codes on paper – each card has a unique code printed on it. Write down the numbers and letters (you can also write down any additional codes such as expiration date and activation number). Next time when you want to use one of those cards, just go online and type in the handwritten code directly into the retailer’s website; don’t enter any other personal information such as your name or address. Keep them stored in a safe place such as a lockbox where they won’t get damaged.

This option is particularly useful for travelers, who are often in need of local currency all over the world. Electronic – scan each card and save them in a folder on your computer or mobile device; that way you’ll have immediate access to the value at any time while keeping it secure from physical harm. This method can also be used by those using small amounts of cash as their primary form of payment (like those who live abroad).

Most people prefer plastic gift cards because of the convenience although there’s always some risk associated with carrying large amounts of cash around. If you plan on doing so, then please make sure that you are familiar with what plastic card fraud looks like and how to protect yourself from it.

Types of gift card scams

When you’re shopping for gift cards, you have to be on the lookout for scammers who steal money or use your credit card details without your consent. There are a few types of scams that look like this:

Fake Websites – there are countless websites selling gift cards at discounted prices; many people fall victim to these sites when they try to save some money on holiday shopping. Buyers should avoid buying discounted gift cards online unless they know that website and can tell whether or not it is legitimate. Even if a website looks legit, never provide any personal information such as name, address, social security number and bank account details.

Fake Phone Calls – phone scammers often call unsuspecting victims, telling them that they’ve won a new Apple iPad or iPhone. The caller typically says that the victim needs to pay a small fee to cover the shipping costs; this is where things get sticky because these fees are in reality just stealing your money. Instead of providing any personal information such as name, address and social security number, hang up the phone immediately or wait for the fraudster to issue an RMA (Return Merchandise Authorization) number.

A Limited-Time Offer Scam – this one happens when someone calls you claiming to be from a local investment firm or financial institution that offers limited time only gift card deals on credit cards with high-interest rates. The scammers trick you into adding a credit card to your existing account, leading you to believe that you’re securing additional savings.

Fake Physical Stores – the goal of this type of scam is to get you to fall for one of the above-mentioned phone calls. A fraudster will set up a fake physical store where unsuspecting victims come in and pay for gifts cards that are never delivered. A good way to avoid this kind of scam is by first looking up the exact location of any business you may want to buy a gift card from, as well as checking customer reviews before using them.

Check your gift cards

If you already have gift cards lying around and want to make sure that they are not compromised, then there’s a way for you: as directed by the FTC, check the back of your card to see if it has a special security scratch-off panel. If it does, remove the cover and thoroughly check the code on one side. Use a small piece of tape to mark any letters or numbers that do not match with what is printed on your receipt/packing slip; take note of any discrepancies in case fraud takes place after making a payment transaction online. You should also try contacting customer service (if possible) before making payments using them just in case there are issues with your cards.

Ways to protect yourself from gift card fraud

The best way to avoid fraud when it comes to gift cards is by being vigilant and keeping an eye out for anything suspicious. Here are a few ways that you can do so:

  • Always check the packing slip as well as any receipts before placing your order. This will give a clue if the card was bought from an authorized retailer or not. Also, make sure that the receipt says if there are additional fees associated with the card.
  • If you plan on using multiple credit cards at one go, then keep your credit information in different places so no one gets access to all of them. Remember that debit/credit card numbers can be easily stolen without notice.  It’s still safe to use either one alone at separate transactions.
  • Avoid buying gift cards online if you do not know whether or not the website is legitimate. If you’re not sure about a site, check it out on phishing sites for more information. Consider other options like personally ordering from an authorized retailer inside your area instead; this will also give you peace of mind knowing that what you’re about to receive will be legit and backed by a customer service representative.
  • If possible, avoid giving your credit/debit card number over the phone even if someone claims that they are a company’s representative who can help fix issues with your account or reactivate lost cards. You’ll have to use your judgment in which cases it’s safe enough to provide such personal information as there still may be circumstances in which creditors/financial institutions ask for it.
  • If you’ve already fell victim to a scam and handed over information, then don’t panic as there are ways on how you can protect yourself. First off, if someone used your payment card number (or fraudulently obtained one) without your permission or knowledge, report such instances immediately by contacting the company associated with that purchase report possible unauthorized credit card charges to your bank. This will give you peace of mind knowing that any further transactions will be stopped from happening. Make sure to keep all of the documents involved in case additional assistance is needed; for example, if you had chargebacks before. Also, make sure to use different passwords for each account so there’s no access to all of your personal information. Don’t click on links inside suspicious emails as this may inadvertently cause more harm than good.

If you want to avoid scams and frauds when it comes to gift cards, then refer to the following tips:

  • Whenever possible, opt for physical gift cards with scratch-off security panels rather than purchasing them online or over the phone. This will give you peace of mind knowing that what you’re about to receive is legit and backed by customer service representatives if needed.
  • Consider other options like personally ordering from an authorized retailer inside your area instead; this will also give you peace of mind knowing that what you’re about to receive will be legit and backed by customer service representatives if needed. Just be sure to carry out your own due diligence and customer research first before giving out any payment information.
  • If possible, avoid purchasing gift cards online or over the phone for safety purposes. If you must do so, then make sure that there’s a customer service agent available just in case there are issues with your purchase; try calling the number on the website itself and not anywhere else.

Additional tips on how to avoid fraud when ordering gift cards online

When ordering from an online merchant, check their reputation by looking up reviews on third-party sites (such as Yelp). This will give you valuable insight into what other customers think about them; and whether or not they provide good services, products, etc.

Be careful about the wording of gift card promotions. There may be some that sound too good to be true; in addition, if it sounds too good to be true then it probably is. Make sure to read all terms and conditions thoroughly before purchasing anything online just in case there are any hidden fees involved with it or requirements for claiming them later on.

So as not to give away your identity over the phone:

  • If you’re looking for a legitimate place where you can find gift cards, make sure that you do more research before handing out any sensitive information over the phone because scammers may try making you think they’re someone they aren’t by using a similar sounding name or saying that they’re calling from an official business number (many of them are actually spoofed numbers). Know who you’re dealing with and try to avoid giving out information that’s too private.
  • When comparing prices between different retailers, make sure to do it in person or over the phone before purchasing gift cards; this will give you peace of mind knowing that what you’re about to purchase is legit and backed by customer service representatives if needed.

Additional tips on how to avoid fraud when buying gift cards in person

Before making a purchase, inspect the card (either physically or digitally) for any signs of tampering or damages including anything else that may compromise its authenticity such as scratches, scuffs, etc. Make sure all of the serial number digits here match up with whatever was advertised. If possible, buy from a reputable store/retailer with many physical locations inside the local area so that you can easily get assistance if needed.

Additional tips on how to avoid fraud when sending gift cards

If possible, use secure and traceable shipping services such as USPS Priority Mail to ensure that your gift cards don’t end up being lost in transit. If using a private carrier, make sure that they’re well known (e.g. FedEx) because there are some scam operations out there; know who you’re dealing with first before handing over your payment information or sensitive information like credit card digits. Never send gift cards as an attachment through email or messaging platforms like Facebook Messenger because this makes it easier for scammers to intercept them; only give them out in person or by mail as attachments.

Additional tips on how to avoid fraud when receiving gift cards

Be wary about any gift card promo codes that may be advertised and make sure to only use the ones from legitimate sources; there are some scam groups out there that will advertise them on the web for misleading reasons (usually, these kinds of offers will include exclusivity clauses but are actually applicable to all customers). If possible, buy your cards either online or in physical locations instead of buying off of street corners because websites like Craigslist usually show signs of scams when it comes to this type of transaction.

Make sure to read terms and conditions carefully before purchasing anything online just in case there are any hidden fees involved with it. Also, if it seems too good to be true, it probably is; always do your homework before trying out any offer or buying anything online.

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