How to Spot and Avoid Gift Card Scams

The IRS and state troopers are always on the lookout for tax collectors. They can find you in your favorite coffee joint, waiting to pounce at any moment. 

Ever get a voicemail or text message from an agent aggressively warning that you owe taxes and the only way they’ll let go of their claim is by sending an electronic gift card like Amazon or Green Dot? 

Or maybe you got a phone call saying speeding tickets needed to be paid off via Amazon gift cards. 

Wouldn’t it make more sense just to pay them than sitting around worrying all day long every time some government official comes calling?!

The thing is these people aren’t really police officers, law enforcement nor government officials. They’re scammers pretending to be using their power for financial gain.

These days, there’s always an agent or official warning you about some new scam – whether on the phone or in person. 

And if they’re not doing that, then chances are good at least one of your friends has gotten a voicemail from them demanding payment for some kind of debt before allowing you to go free. 

But why? What gives with these people??

Lately, I’ve had quite a few messages left by law enforcement officers who say things such as “you owe taxes” and my only option is to pay up via gift card because otherwise “my job will be lost.”

Gift card fraud is a type of con in which criminals trick victims into either sending them online gift cards or reading the numbers on the back for an already-purchased item. 

This can be done by calling, emailing, and texting with these dangerous requests – don’t let it get past you.

These are examples of gift card fraud in which criminals trick victims into either sending online cards or reading numbers on the back-of phone call overspent with regards to Gift Cards as well.

If you receive such calls, emails, or texts from someone claiming to be your favorite store, a bill collector, or a caller pretending to be a law enforcement or government official and they want gifts transferred onto their account – ignore them. 

Hang up!

Best yet- DON’T ANSWER PHONE NUMBERS YOU DO NOT KNOW.

We all have voicemail.

If the caller is legit, they will leave a voicemail because they genuinely want to talk with you. 

When you get a gift card for someone else’s birthday or holiday, it can be hard to know what the best use of that money will ultimately end up being.

Some people might think they’re doing good by giving out some tokens instead of cash but in reality, these cards may lead them into an expensive situation with no way out! 

Gift cards are a great way to show someone you care, but there’s always the risk that they might be used for something else. 

Yes, brand-new gift cards may be already in use. 

Read on to avoid falling victim to used gift cards and scams.

How Gift Card Scams Work

The thieves behind these scams rely on high-pressure tactics to scare people into obtaining gift cards for criminal purposes.

The Federal Trade Commission says scammers will usually call, text, or email victims and tell them they are in some sort of financial trouble. 

They might claim that the victim hasn’t paid their taxes yet; owe hundreds on speeding tickets for driving, or need money for a medical emergency.

Scammer threats can be pretty severe like having your power cut off if you don’t pay up right away.

High-pressure tactics are used by thieves to scare people into getting gift cards for payment. 

There could also potentially come Kingpins demanding money right now over something else really important such as your home loan. 

That’s why it pays off so much when you know what signs point out red flags before getting tricked. 

The thieves behind these scams rely on high-pressure scare tactics to frighten people into giving away gift cards for things like gas, Amazon, Walmart, Green Dots, or Visa. 

The scammers will then demand that victims purchase a gift card and either send them an electronic version of the card or provide them with the gift card’s number and PIN. 

Once they have this information, they’ll use it to buy whatever they want with the gift card, and victims will be out the money they spent on it.

7 Common Types of Gift Card Scams

Scammers might try to trick you by phone, text, or email with these seven common gift card scams. 

Here’s how to spot the scams and avoid them.

Scam 1: Threatened by the IRS

The IRS will never contact you by phone or email about unpaid taxes. A scammer might call claiming that they are with the agency, but this is a red flag because it means there has been some sort of theft on their end too!

This criminal could say anything from saying how much money you owed all along-to asking for payment via gift card. 

If this has happened, it is most likely part of a larger scam to steal personal information from people who have been targeted for fraud because they seem like good candidates based on their name and location. 

You call back and read off any necessary information including numbers or PINs so that he can use it at his leisure online.

The criminals will usually ask for specific retailers’ gift cards and PINs when you call them back, but there is no need to give these out because it’s illegal. 

Once you purchase gift cards from a specific retailer, the scammer will usually request them for your account.

They use your information as if they were shopping online themselves.

Unfortunately, there are many variants in which the criminal may try different tactics but always keep an eye out. 

The giveaway here? 

First, the IRS will never call, text, or email you about unpaid taxes. 

The IRS will always send an official letter with a phone number for you to call.

Secondly, the IRS will never threaten to send you to jail for taxes you owe.

And, finally, the IRS will never request that you pay owed taxes with a gift card.

There would be no proof of you paying your balance with a gift card.

The government would allow you to mail a personal check, cashier’s check, or pay online. 

Scam 2: Beware the Bots

Gift card scammers often turn to bots – software applications that perform automated tasks online — to drain the gift card balances of unsuspecting consumers.

Scammers might use an automated bot to search for gift cards that have been activated.

The GiftGhostBot is a clever and innovative way to search through retailers’ online gift card balance check systems for unactivated cards.

The GiftGhost Bot is searching for activated gift cards on retailer websites.

It then downloads these images to be reused by future users who want them, so you’re likely never going without an available digital present again.

When the bot finds one, criminals use the gift card number to make purchases themselves or they sell the gift card’s information on the dark web.  

The scammers are always one step ahead of you. 

They’re draining your card as soon as it’s loaded with value, then canceling or blocking access to the account so their scheme works and they drain all funds from our bank account. 

And there is nothing you can do about it! 

One way is just to use those pesky gift cards right away rather than letting them discover how much money has been sent decreases the chance to discover your card information.

Scam 3: The Shady Cashier

It can be hard to know who is trustworthy when you’re in a store, but one way that many scams are being played on consumers these days have more than just traditional tricks. It’s called “the cashier scam.” 

You might purchase an item with your credit card at department stores like Sears or JCPenney only for them to say they need help processing payments because it was made out of range – even though there were no issues during check-out.  

The cashier might activate that gift card but instead of handing it back to you, switches the card with one that hasn’t been activated. 

The cashier then keeps the activated card and gives you a card that doesn’t work. The cashier can then use the activated card that you bought to make purchases.

The scam is so clever, it’s almost too good to be true. The store employee will give you back your gift card instead of handing over an unused one–but make sure not to hand them any cash.

The scam is so clever, it’s almost too good to be true. The store employee will give you back your gift card instead of handing over an unused one–but make sure not to hand them any cash!

The best way to avoid this scam? 

Watch cashiers as they check you out. Make sure they hand the gift cards back to you as soon as they activate the card.

Scam 4: Stealing the Numbers

They’re always trying new ways to steal your money! One popular scam these days is when thieves use a magstripe reader that reads numbers stored on gift cards. 

They grab handfuls of Gift Cards from stores like Walmart or Target, and put them back onto display for everyone else in the store before walking off with their loot.

The scammers call up the customer service number on these cards and enter your copied gift card numbers. This will let them know if someone has purchased it, as well as how much money is left for the balance that they steal.

The scammer can then use the gift card number to make online purchases, draining the balance of a card you bought.

Want to avoid this scam? Don’t buy gift cards off publicly displayed racks in retail stores.

Scam 5: The Online Auction Scam

When buying at online auction sites, it’s important to be aware that many scammers sell gift cards that haven’t been activated. You pay less than their true value for these “bargains” only after thinking you’re getting a good deal because they are cheaper than what is listed on the card.

However when trying to use them in-store or by phone call etc…the customer finds out there aren’t any usable funds left.

Don’t buy gift cards at online auction sites – scammers often sell those that haven’t been activated. 

You pay for them, thinking you’re getting a great deal because they cost less than what’s on the front of your card; only to find out when it doesn’t work (and there is no return policy).

Other scammers lie about the value of the gift cards they are selling online. They might claim that the gift card is for $50. You pay for the card, receive it, and find out that it only has $5 left in its balance.

Avoiding this scam is simple: Never buy gift cards from an online auction site. If you do want to buy gift cards online, buy them directly from the retailer offering them.

Scam 6: The Fake Prize

Scammers are trying to take advantage of our joy by promising us the lottery and other amazing prizes. They say you’ve won some money but first need to pay an expensive fee in order to take home what they promise is yours for free.

You may get a call, email, or text from someone claiming to be with your local lottery office. They say you’ve won big and need only send them some money for processing before they can take care of the winnings! 

But there’s one little hitch: these scammers are always asking people for gift cards before giving out any prizes — then once those red flags go up in most cases (especially around holidays), it becomes clear this isn’t really what it seems.

You may have heard that you can win a big prize just by filling out some forms, but this is another scam. 

No legitimate organization will ask for money in order to claim their prizes and there’s nothing at all rewarding from entering any kind of sweepstakes or lottery if it wasn’t already existent beforehand.

This is another scam. No legitimate lottery or business will ask you to pay a fee in order to claim your prize.

And you’ll never win a prize from sweepstakes or lottery you didn’t enter in the first place.

Scam 7: The Power Company Calls

Have you ever had a bill collector call and say that they will cut off your power if it’s not paid immediately? Public utilities scammers are always looking for ways to get your money. They claim that you owe them, even though it’s not true! 

If this sounds familiar, then there might be some fraud going on with the public utility companies in our area. They are using threats of legal action as leverage to get payment from customers who have been paying their bills regularly each month!

The only way we can protect ourselves against these scammers is by learning how real representatives expect payment.  

A representative will call up claiming he/she is from “your local utility company” and demand immediate payment over phone lines without providing any options other than gift cards which provide no benefits.

Again, this is a scam. The person calling isn’t from the utility and will simply use your gift card information for a shopping spree. Your public utility will never call you to say that you owe money. It will instead send a letter.

Your utility also won’t threaten to shut off your power or water without first giving you plenty of warning and time to pay back what you owe.

And utilities won’t accept payment through a gift card.

Conclusion

The holidays are a time when we’re all looking for the best deals and ways to save money. It’s also a time when scammers are out in full force, trying to take advantage of unsuspecting consumers. 

Although gift cards are a popular present, they can also be a target for scammers. Be on the lookout for these seven types of gift card scams and take steps to avoid them. 

That’s why it’s important to be aware of the different types of gift card scams that are happening right now. If you know what to watch for, you can avoid being scammed and keep your hard-earned money in your wallet where it belongs. 

Stay up to date on the latest scams by following our blog and never answer phone numbers you don’t recognize – they could be scam artists trying to steal your personal information. 

Thanks for reading and have a safe and happy holiday season!