With the holiday season comes more shopping and with more shopping comes more scams and fraudsters looking to take advantage of your holiday goodwill.
From supposed charities looking for "donations" to balances that are empty even though you haven't used them yet, gift cards are a big item in the world of scams. They are used in a variety of common tricks and, because they do not come with the same protection as a credit card or bank account, often leaving people high and dry when it's time to try to get their money back.
Even the most tech and street-savvy of us can easily fall victim to these schemes if we aren't paying close attention. The Federal Trade Commission, Department of Justice and multiple state officials have already issued warnings this season about some of the most common red flags to watch out for.
Don't give a scammer the gift of your Christmas funds this season. Instead, stay aware and keep these tips in mind.
"Card draining" is a popular scam that leaves gift card purchasers with an empty balance despite having paid for the card. Several local and national law enforcement agencies have recently issued warnings about this type of scam, saying the holiday season is the time they see an increase in people being targeted.
As previously reported by USA TODAY, gift card draining happens when fraudsters can gain access to physical copies of the cards in stores. They tamper with gift cards, using a reader to scan an unpurchased card's number and record it. When that card is actually purchased and activated, they redeem the loaded funds with the stolen number. Some have devices that allow them to replace the silver strip that is scratched off to redeem a card, while others choose cards that come in envelopes so you cannot see they've been scratched until it's too late.
Scammers may also pull gift cards off the shelves and take them elsewhere, replacing them with other decoy items. After gathering information from them, they replace the now tampered-with cards on the shelves for people to purchase and load with money.
Once the cards are drained, the purchaser or recipient of the card is left with an empty balance.
According to the Pennsylvania Attorney General's Office, here's how to protect yourself from this scam:
What to know about the gift card scam:Police warn holiday shoppers about card draining
The classics never go out of style. It is common for scammers to make calls or send messages asking you to pay for any number of things via gift cards. To do this, the thief generally tells you which cards to buy (iTunes, Amazon, etc.) and at what amount and then asks you to scratch off the code and send them the numbers to redeem the card.
As many people unfortunately find out, you never actually receive anything in return for these "payments" via gift card. Whatever they tell you you're paying for with the gift card balance, in reality, is being used to line some dishonest person's pockets.
According to the FTC, the rule of thumb is as follows: if someone, no matter who they say they are, is contacting you and asking for payment via the purchase of a gift card and sharing of the numbers, it is a scam.
Use your gift card and gift card store receipt for these next steps if you have already given someone a gift card number:
Romance scams are some of the most well-known gift-card ruses out there. Often targeting older people or the less tech-savvy, scammers strike up a relationship with the victim, convincing them they are romantically involved with someone overseas or otherwise in a situation that makes them unable to meet up in person.
Though it can be more of a long con, it can be very fruitful for scammers, who can get multiple payments out of the same person by consistently talking to them online. They use the same method of asking the victim to transfer funds via a gift card, often under the premise they are in some kind of trouble, need some kind of help, or are saving up to come visit the victim.
According to the FTC, the bottom line is to never send money or gifts to a romantic interest you've never met in person.
If you suspect a romance scam:
One sure sign of a scam is someone pressuring you to do something in a finite period. This sense of pressure is common in impersonation scams, as perpetrators fabricate a situation in which a person urgently needs to respond and doesn't have ample time to think about what they're doing.
Some common examples are scammers posing as the IRS, Social Security Office, a police officer or other government or official agencies. They tell the person they're calling that they owe a large amount of money or are about to lose their benefits and tell them to rectify this by sending money via specific gift cards.
Charities and businesses are often impersonated too, with scammers convincing victims they are giving money to a good cause or that they're paying a bill from their internet or cable company.
People you know can even be impersonated now, thanks to the latest tech. Some scams include the use of a fake caller ID and a generated voice that looks and sounds like a loved one, urgently telling you they are in trouble and need help. In a panic, many people don't think twice about buying and sending the codes of some gift cards, believing their family member is in danger.
The FTC advises a healthy dose of skepticism when interacting with people who contact you via phone, email or message. According to their guidance:
Your email spam folder has likely caught at least a couple of these. You suddenly have a Walmart or Amazon gift card to redeem even though you don't remember ever buying one. It doesn't come from someone you know and often is advertised as being a prize resulting from a raffle or contest that you also don't remember entering.
You may have even "won" something bigger, like a car or vacation. Often, you are encouraged to "redeem" your reward by clicking a link and paying a "redemption or claiming fee." Of course, these "fees" can only be paid via gift cards and do not gain you access to any sort of actual prize.
The FTC says the simple rule to keep in mind is asking yourself if you've entered any sweepstakes or lotteries lately. If not, you have not won something. Some other ways to avoid prize scams:
Found someone selling gift cards secondhand online for a discounted price? See a child or someone else who looks like a charity collector outside a store asking people to purchase gift cards secondhand for a "deal?" Sign up for a "savings club" discount that supposedly knocks money off your gift card purchase?
While buying gift cards at a discounted price sounds like a great way to save on holiday gift spending, the old adage applies: If it seems too good to be true, it probably is.
Any gift card sold secondhand cannot be verified or guaranteed to contain the amount advertised. They may be empty, have a lower balance than promised, have already been used or are not even real in the first place. In some cases, signing up for a "one-time discount" actually sneakily enrolls you in a recurring membership that charges automatically to your card, quickly surpassing the amount you originally "saved" via monthly charges.
Never buy a gift card secondhand from anyone, even if they look like a Girl Scout. the only safe place to buy a gift card is through an official channel, meaning either the company's website, company store, or another trusted retailer.
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