How To Avoid Gift Card Scams


How to Avoid Gift Card Scams

No government agency or reputable business will ever ask for payment with gift cards


Gift cards are a convenient way to give someone a gift. One you know they'll love because they can choose the perfect gift for themselves. They're also an increasingly popular way for scammers to steal your money. That's because gift cards are like cash.  The key to avoiding this is to remember, gift cards are for gifts, not bill payments. Anyone who demands payment by gift card is a scammer.  No government agency or reputable business will ever ask for payment with gift cards. Let's break down how these scams work.

What is a gift card scam?

Gift card scammers all have in common an urgent need for you to send money immediately. Sometimes they ask you to wire them money, but, increasingly, they ask you to buy gift cards.  The caller will tell you to get several gift cards at a certain store, often Walmart, Target, Walgreens, or CVS. Frequently, the caller will stay on the phone with you while you go to the store. Once you buy the card, the scammer then will need the gift card number and PIN on the back of the card. They then use those numbers to immediately drain the money from that card.  Once they have the money, they hang up and your money has vanished along with any trace of the scammer.

Common Gift Card Scams – Be alert to the following situations

Scammers call pretending to be from a utility company, telling you to pay your bill by gift card or they'll cut off your power or water.

Shady online sellers ask for gift cards to “buy” big ticket items like electronics.

Scammers tell victims that their Social Security number has been used to open numerous accounts or that they are involved in some sort of drug-trafficking or money-laundering operation. To protect their money or to avoid being arrested, victims are told to send money to help resolve the situation.

Someone posing as a service-member to garner sympathy, saying they have to sell something quickly before deployment and need you to pay by gift card.

A scammer who says you've won a so-called prize for a sweepstakes you probably never entered, but first, you have to use a gift card to pay fees or other charges.

Scammers buy a gift card and activate it. They then make stickers of that card's bar code and place them on cards that are in stores. When a customer buys a card it loads funds on the card that is in the scammer's possession, not the one in your hand.  A recent NYPD warning was accompanied by a photo showing a doctored gift card that had turned up at a New York City store. Someone had taken a bar code from a purchased gift card, made several official-looking stickers with the bar code, and then placed them on cards that hadn't been sold yet.

These criminals also copy down gift card numbers on cards at stores, then scratch off the coverings above their PIN, giving them access to card balances once they're activated later on by consumers. They cover the PIN with stickers that can easily be bought online, so that it's tough to tell that the cards have been tampered with.

Read more: Know the Red Flags of Student Loan Relief Scams

Scammers also use online bots to guess the PIN code of gift cards. In many cases, the codes are just four digits, making them easy for hackers to crack.

Especially during the holiday season, little-known websites will advertise gift cards for popular retailers at steep discounts. These websites may also be using these offers to steal your payment card numbers or other personal information.

How to prevent being scammed

Buy gift cards from sources you know and trust and avoid buying gift cards from online auction sites, because these cards may be counterfeit or stolen.

Inspect a gift card before you buy it. Check that none of the protective stickers have been removed. Make sure that the codes on the back of the card haven't been scratched off to show the PIN number. Report any damaged cards to the store selling the cards.

Keep the receipt with the gift card. Whether you're giving or getting, try to keep the original purchase receipt, or the card's ID number, with the gift card.

Use the card as soon as you can. It's not unusual to misplace gift cards or forget you have them. Using them early will help you get the full value.

Read more: How to Deal with Scam ‘IRS' Phone Calls

Buy gift cards online directly from the retailer. Criminals don't have easy access to those cards. This is especially important if you're purchasing a high-value gift card.

Don't buy in-store cards with easily accessible numbers and PINs. If you've waited till the last minute and absolutely have to buy a gift card in a retail store, look for those kept behind the counter or in well-sealed packaging.

If the cards are out in the open on a rack, look at a wide assortment and inspect the bar-code numbers to see if there are duplicates or if the packaging has been tampered with. If the cards aren't in view of surveillance cameras or store employees, get yours somewhere else.

If you receive a card as a gift, change the security code as soon as possible. Register the card when you get home, change the PIN, and don't delay in using the money. The longer a card sits around, the more likely a cybercriminal is to steal the balance.

What stores doing to help prevent these scams

Apple, Best Buy and Target train employees to be on the lookout for people who may be buying gift cards while in the midst of being defrauded. These people are usually in distress due to the ‘emergency' situation the scammer is portraying.

Read more: Tips to Avoid Housing Counseling Scammers

Stores such as Best Buy, Walmart and Target have started to place limits on the purchase and use of gift cards to help prevent fraud. One measure is to lower the maximum amount of money that people could load on to gift cards in one transaction. Another limitation was to put new restrictions on using their gift cards to buy other.

Apple, Best Buy and Target also say they train employees to be on the lookout for people who may be buying gift cards while in the midst of being defrauded. Employees are trained to recognize if they saw somebody in distress.

What to do if you are a victim

If you paid a scammer with a gift card, tell the company that issued the card right away. Ask them if they can refund your money. If you act quickly enough, the company might be able to get your money back. Some card issuers use cybersecurity defense systems, and they may be able to distinguish between honest and fraudulent transactions on your gift card. So if your card has been drained, call the issuer and ask for reimbursement. You might need to show the receipt and the ID number on the card. Most issuers have toll-free telephone numbers you can call to report a lost or stolen card.

Contact the Federal Trade Commission (FTC), which handles complaints about deceptive or unfair business practices. To file a complaint, visit, or call 1-877-FTC-HELP. If your complaint is against a company in a country other than the United States, or you want to find information on where to report in locations outside the United States, visit

The bottom line is that consumers should never try to use gift cards to pay off alleged debts. If someone asks you to do so, it may be a sign that you're being targeted by criminals.

Lori from Linked in

Lori Stratford is the Digital Marketing Manager at Navicore Solutions. She promotes the reach of Navicore's financial education to the public through social media and blog content.

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