How do gift card scams work? Everything you need to know
January 07, 2024
Gift cards are great when you want to treat a loved one to shopping at their favorite store. But that same convenience makes them a prime target for criminals looking to steal money.
The goal of scammers is to trick you into buying worthless gift cards or manipulate you into handing over preloaded cards. If you want to avoid these cons, it’s important to learn how gift card scams work and the different scenarios and language fraudsters use to trick you.
What are gift card scams?
Typically, a scammer will try to trick you into buying a gift card for them or sell you a fraudulent one to get you to send them money. Sometimes, the scammer is someone you know, like a person you met on a dating site. Other times, a stranger calls, emails, or text messages you out of the blue, pretending to be an employee at your job or part of a reputable organization as part of their con. Then they’ll spin a false story about why you must send them a gift card.
In other scenarios, you may not even interact with the scammer — instead, they simply steal gift card information at stores and wait for you to pay for and activate the card. Once you do, they quickly use whatever money is on the card before you have a chance to use it yourself.
How do gift card scams work?
Sometimes, people are successfully duped into purchasing gift cards because scammers manipulate them with fear or emotional appeals. Other times, you may buy a card and not know that a scammer already stole the card information. Here are a few examples of common gift card scams and how scammers prey on peoples’ fear or trust:
In this sneaky gift card hustle, scammers trick victims by pretending to be from an agency, organization, or tech support team seeking an overdue payment.
If you’re their target, they'll call or message you and try to create a sense of urgency and fear by insisting that you must settle your debt immediately with a gift card. They may even throw in threats of serious consequences, like hefty fines or potential jail time. If you fall for it and buy the gift card, they'll then ask for the card number and PIN so they can take the money before you realize their lies.
Fake, stolen, or spent cards
Scammers also sell fake or used gift cards. They may offer them at a discount on sites like Facebook Marketplace or eBay, making potential buyers feel like they’re getting a good deal, like a $50 card for $40. But the cards they sell are either stolen, fake, or don’t have a balance.
The defrauder wins because they receive payment for the transaction, and the purchaser ends up with a useless gift card.
Gift card giveaway scams
Giveaway scams work in two ways. In one model, the scammer will tell their target that they’ve won a gift card and ask for personal information to “complete the process” of receiving payment. But in reality, there’s no gift card. This is just a data phishing scam where they collect your info and don’t give you anything in return.
In the other, a defrauder will pose as someone from a seemingly legitimate prize organization, like Publishers Clearing House. They’ll send the victim a message saying they’ve won a prize, then tell them they must pay fees through a gift card to receive the payout.
Dating, family, and friendship card scams
Dating sites and social media are hotspots for fraud. Here, scammers invest time building friendly or romantic connections online, gaining victims’ trust before requesting gift cards. They’ll convince them the cards are for emergencies or transportation to finally meet in person, then disappear once they get the money.
In other scenarios, cyber criminals will skip the bond-building and pretend to be an existing friend or family member. They’ll contact you through email or social media platforms, like Facebook, saying they need your help getting a gift card for someone you both know. For example, they might pretend to be your sister and ask you to buy a gift card for your mom, then steal the money once you share the card number and PIN.
Stolen gift card codes
Scammers obtain gift card numbers and PINs by copying them from cards in stores. Some cards have a silver strip covering the PIN, which criminals remove to copy the card details. Afterward, they replace the strip with a similar-looking sticker and wait for trusting customers to buy them.
The scammer then tracks the card online to see when it’s activated. Once someone purchases the card — whether it’s a card with a set limit or one where the purchaser determines the amount — the fraudster will hurry to spend those funds before the purchaser can.
Why do scammers want gift cards?
There are several reasons why scammers choose to target gift cards over other payment methods, like debit and credit cards. Here’s why:
Often, gift cards aren’t traceable, and funds on them aren’t protected. So, a person who unknowingly buys a fake card or gives one to a scammer won’t likely be able to recoup their money.
Gift cards are easy to purchase and load — far simpler than transferring money or sending a check — giving scammers more immediate access to money.
Using gift cards provides anonymity. Unlike bank transfers, checks, and credit cards, gift cards bear no personal information. So, if a scammer sells someone a fraudulent card or uses funds that aren’t rightfully theirs, the victim or authorities can’t easily identify the person behind the scheme.
Telltale signs of gift card frauds
Learn how to avoid gift card scams and protect your money and data by recognizing the telltale signs of gift card fraud. Here are a few red flags to watch out for:
High-pressure requests: Scammers want to spook you into purchasing a gift card quickly — before you question the situation. If someone’s putting a lot of pressure on you to purchase a gift card and threatening you with potential consequences, leave the chat or hang up the phone. Organizations like banks, the IRS, or your utilities provider will never ask for gift cards, and their legitimate websites or customer service centers won’t offer or accept this payment method.
Insistence on gift-card-only payment: If an actual entity or person you know needs money from you, like payment for utilities or an emergency situation, they’ll likely offer several payment options — none of them being gift cards. Think twice if someone posing as an employee at your bank or a friend asks you for a gift card to cover a fee or help buy a present for a mutual friend. If these were legitimate requests, the person would offer other payment routes, like a credit card charge or bank deposit.
Offers that seem too good to be true: If you receive a direct message from someone you don’t know, like on WhatsApp, saying you’ve won a large sum of money or a gift card, this is likely a scam. Never transfer funds or give a person sensitive data to receive a prize. Real clearinghouses won’t ask for this information or payment.
What to do if you’re a victim of a gift card scam
If you encounter a scam, take precautions to protect your money and data, and help save others from the same fate. Here are some best practices for reporting gift card fraud and stopping it in its tracks:
Alert local law enforcement and report the fraud to the Federal Trade Commission (FTC).
If you realize you gave a scammer personal information, change your online passwords, inform your financial institution, and closely monitor your account for financial fraud.
Contact the issuer of a gift card you bought for a scammer and ask to freeze the funds or recoup your purchase.
Save yourself from scams with Ironvest
Gift card scams affect countless people and are responsible for millions in losses. Learning to recognize these and other frauds is a great way to protect yourself and limit the success of criminal operations.
You can also take extra care with your financial information to prevent scammers and phishers from accessing it, even if you fall into one of their traps. Get IronVest and maintain your digital privacy with biometric authentication. This security feature uses facial recognition to verify your identity and ensure only you access your funds. IronVest also offers masked debit cards and email addresses to keep your data hidden from prying eyes. With these robust security features, you can confidently manage your financial data with peace of mind while keeping scammers at bay.