Education

Buy gift cards for giving. That’s it.

Gift cards top the holiday wish list for more than half of Americans, according to a 2017 survey by the National Retail Federation, but your loved ones, neighbors and friends aren’t the only ones who love gift cards—they’re also a scammer’s favorite way to steal money.

The Scam

Fraudsters will contact you by phone or email and claim to be the IRS collecting back taxes, an IT professional asking for money to fix your computer, a family member with an emergency expense, or even a sweepstakes company saying you’ve won, but you need to pay a small fee first. The scammer will then request payment via specific gift cards (such as iTunes or Google Play) purchased at specific retailers (such as Walmart, Target, Walgreens or CVS), like one Appleton woman who lost $9,800 in a gift card scam.

And scams related to gift cards are not showing signs of slowing down. According to a recent FTC Data Spotlight, 26% of scammers requested payment via gift card, leading to a whopping $40 million in gift card losses by fraud in 2017. Payment by gift card allows scammers to remain anonymous and payments typically cannot be disputed or reversed.

What to do

  • Know the facts. Reputable companies and government organizations will not ask for gift cards as a form of payment. We’ll say that again: companies you can trust will not ask you to pay with gift cards. Fraudsters use fear tactics and a sense of urgency—like claiming you owe money to the IRS and will be thrown in jail if you don’t pay—to get you to act quickly (before you’ve had a chance to think it through and ask questions).
  • Don’t pay to claim a prize. Fraudsters play off emotions—including excitement—and tell people they’ve won money or other prizes but need to pay a small fee by gift card to claim it. While these situations may seem urgent, it’s worth the extra few minutes to save yourself some serious cash.
  • Ask for details. As with any email or phone call you receive, make sure it’s coming from a legitimate source. Ask for the caller’s name, company and call-back number, and take some time to do a little Googling to see what others are saying.
  • Report it. If you paid someone with a gift card, report it as soon as possible. You can file reports directly with the card company, as well as with the FTC.

Not sure if you’ve received a legitimate offer? Call us at 800.448.9228 and we can help you verify the authenticity of a phone call or email.

It’s Verve’s goal—in line with our guiding seven Cooperative Principles—to provide education, training and information to help our members stay financially fit. Verve is committed to keeping our members educated when it comes to their finances by providing details on financial risks and ways to stay safe. Help your friends and family protect themselves against gift card scams by sharing this blog post.