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12/4/2019

Avoiding Gift Card Scams

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Gift cards have become a popular gift choice for last minute gifts or for those that would rather pick their own gift. In fact, gift cards are so widely used that according to the National Retail Federation Gift Card Spending Survey, the percentage of people in the United States that will purchase or receive a gift card is as high as 93%. On average a person in the U.S. receives about 7 gift cards per year. The gift card industry is estimated to reach about $160 Billion in 2019.

Unfortunately, where there is profit there are those looking to take advantage. Gift cards are the on the rise as the form of payment requested by scammers. One third of the people who have reported fraud to the Federal Trade Commission this year claim they were asked to pay by gift card or reloadable card. That amounts to a 300% increase in a three-year time span for the same type of scam. The increase is so significant that gift cards and reloadable cards have become the number one payment method of choice for scammers.

The scamming scenario using a gift card is usually very basic. The scammer will call or e-mail a person they have targeted, explaining a situation for which they need immediate funds and require payment by gift card. The most requested cards are iTunes, Google Play and Amazon. Since gift cards are like cash and cannot be traced, scammers can be anonymous in their spending as long as they have received the gift card number and pin info from their fraud victim.

Gift cards offer less protection for consumers that do not have as many rights and cannot fight as fiercely for refunds or protection from fraud as they could on a credit card. Just in the past year over $74 million in fraudulent charges has been reported on gift card scams. Financial scams have become so sophisticated they can be played on anyone. Even those that have knowledge of the scams and are proficient in technology have fallen victim. However, those most likely to be scammed are seniors age sixty-five and over.

The manner by which scammers are most successful is by duplicating or recreating emails and phone calls to be as similar to an authentic version as possible. To avoid being scammed, consumers should use verification steps to confirm authenticity before ever sending money. Place calls to be sure that the people mentioned in the phone call or email are legitimately in need and do your research to fact check details. Do not be pressured by time constraints, as is often the ruse used by scammers. Carefully ascertain e-mail addresses and phone numbers used to contact you. Many times this information will be close to what it should be for people you know but off by one or two digits or letters.

In the end, the ultimate method by which you can avoid being scammed is to never pay for anything via e-mail or phone unless you initiated the call. Know that businesses, government officials and law enforcement would never request payment by gift card. That is a guaranteed red flag that the call or e-mail is a scam.

In the event that a scam has already taken place with funds deducted from a gift card, your best recourse is to contact the company that issued the gift card an alert them of the fact that it was used for scamming purposes. If this is done prior to the funds being spent, there is a chance that the funds may be refundable. The fraud should also be reported to the FTC at FTC.gov/complaint.

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