UNDATED – Today’s scammers want gift cards as payment, leaving those unaware of this tactic vulnerable to schemes designed to commit fraud. Better Business Bureau (BBB) research shows fraud reports to BBB Scam Tracker involving gift cards as a form of payment spiked in the first three quarters of 2023, up 50% from the same period the year prior. Scammers have doubled down on gift cards as a method to steal money from consumers – especially online shoppers – leading retailers to implement new fraud prevention solutions in response.
A new BBB study update, “Growth of gift card scams causes retailers to innovate solutions,” examines patterns of reports, dives deep into court documents, reviews financial losses, and highlights interviews with affected consumers. The goal is to educate everyone on the tactics scammers use with gift cards.
Key findings:
- Technology, like algorithms meant to detect fraudulent behavior, helps retailers stop scammers in their tracks and sometimes return money to customers.
- Fraudsters leverage international networks to convince consumers to hand over gift cards.
- Advance fee loans, government impersonation, phishing and lottery/sweepstakes top the list of scam types used most often to obtain gift cards.
- Scammers frequently seek gift cards from big-box, technology and online stores.
Key statistics reported to BBB and Federal Trade Commission (FTC) since 2020 about gift card payment scams:
- 3,918 BBB Scam Tracker reports
- 177,074 reports to the Federal Trade Commission’s Consumer Sentinel Network with $690 million in losses
- In 2021, BBB’s International Investigations Initiative examined gift card payment scams in an in-depth study, “Gift card payment scams: BBB reveals why scammers love gift cards.” Since then, retailers have identified several methods to protect consumers, but warn that it is impossible to stop all scams as fraudsters continue to find ways around safeguards.
Richard in Tempe, Arizona, reported to Scam Tracker he received a call from someone claiming to be from Amazon. There was a suspicious charge on his account, they said, and it looked like possible identity theft. The person claiming to be from Amazon offered to connect him with someone from the government. He was asked to withdraw $10,000 and convert it to gift cards. He sent several hundred dollars before realizing everyone involved were scammers.
A Nebraska couple, eager to secure a rental car for their Florida vacation, mistakenly dialed what they believed to be Enterprise after a Google search. Falling for an apparent deal with American Express that allowed them to use pre-paid cards for rental savings, the couple sent $400 to scammers posing as Enterprise agents. When the scammers claimed the cards were invalid and demanded an extra $400, the couple grew suspicious. Realizing the deception, Sue and Darwin promptly contacted the legitimate Enterprise hotline, where a representative confirmed they had been scammed.
A Nebraska woman’s quest for a furry companion turned into a heartbreaking ordeal as she encountered not one, but two scams while searching for a puppy. In both instances, the scammers requested payments in gift cards, a red flag that the woman unfortunately failed to recognize. On the second occasion, Jill visited the specified, local address. To her dismay, upon arriving at the location, a woman informed her that she had fallen victim to a scam.
BBB tips to spot a gift card scam
- Be wary of anyone asking for payment with a gift card, including “government” agencies. No legitimate government organization will ask you to pay with a gift card.
- If you suspect a scam, contact the gift card seller, the actual business or government organization supposedly asking for money, and BBB to ask if you are dealing with a scammer. To find contact information, go directly to the organization’s website rather than search for their customer service number, which can be spoofed by scammers.
- Keep all information related to your purchase if you are scammed, because some retailers may require that information for refunds.
- If you suspect fraud, act immediately, contact the gift card seller or the number on the back of the card to report it.
Follow advice and report suspected scams to BBB Scam Tracker and the Federal Trade Commission.
