By Nathalie Voit
Gift cards are a notoriously popular payment method for scammers, a new report from the FTC found. In the first nine months of 2021 alone, consumers lost $148 million in gift card scams, greater than all reported losses in 2020, the FTC said.
Gift cards come with fewer anti-fraud protections than other payment methods like credit cards, making them an easy pick for scammers looking to defraud you this holiday season. If someone asks you to pay them with a gift card, regardless of who it is, rest assured that person is a scammer, the FTC cautioned.
A gift card scam will usually begin with a phone call from someone pretending to work for a large company or government agency, like Apple or the Social Security Administration.
Once they have your attention, the caller will say the issue is urgent, asking you to pay, or something awful will happen. The caller may send you to a specific store or ask you to purchase several cards at once. They will tell you which gift card to buy. Once they’ve gotten you to purchase the gift card, they will ask for the card number and PIN so they can steal your money.
Target gift cards are scammers’ preferred choice of payment, with over twice as much money being reported lost or stolen on Target gift cards than any other brand. The report said that Google Play gift cards are next, followed by Apple, eBay, and Walmart cards.
Target stores are also scammers’ favorite places to send unsuspecting victims to purchase gift cards. Walmart, Best Buy, CVS, and Walgreens were also popular retailers where people reported losing money to gift card fraud.
The agency warned that reports of gift card scams and total losses have risen steadily since 2018. Between January 2018 and September 2021, median losses reported to the FTC increased from $700 to $1,000. Additionally, when individuals became the victims of gift card scams, they reported losing more money. The FTC found that losses of $5,000 and up increased from 8% of reports in 2018 to 14% of reports through the third quarter of 2021.
If you suspect you are the victim of a gift card scam, report it to the card issuer right away. Then file a report to the FTC at ReportFraud.ftc.gov.
Apart from gift card scams, be on the lookout for end-of-year student loan scams, the FTC warned.
If you receive a call, text message, or e-mail from a stranger about your federal student loan, remember never to give out your Federal Student Aid ID, never pay an upfront fee, and never sign up for a quick loan forgiveness program. These are all red flags someone is trying to scam you.
Click the link here to listen to an example of a student loan scam call.