Gift Card Scams: Get Out of the Shadows and Uncover FTC Data

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Maria Mayo, Acting Associate Director, FTC Consumer Response and Operations Division
December 8, 2021

Gift cards may be at the top of your holiday gift list. But there’s another list that gift cards top, and it’s decidedly less festive. According to the FTC’s latest Consumer Protection Data Spotlight, reports received in the Consumer Sentinel database reveal that gift cards are the #1 payment method of choice for scammers, resulting in the theft of $148 million from consumers. consumers. Does your company take steps to protect its customers against this form of fraud?

The scam usually starts with a phone call from a scammer posing as a well-known company. The caller tells consumers that to fix an alleged security issue with their account, the person must obtain a gift card and then send a photo of it to the caller. It’s really just a shady way for the criminal to be able to redeem the card without having it in their hands.

People also report that scammers demanding gift cards may claim to be from agencies such as the Social Security Administration: “Give us the numbers or face frozen accounts or even arrest.” Still others reported that the request came from a romantic interest or someone claiming to be an employer, a lottery business, or a family member dealing with an emergency.

These red flags may be apparent when you think about them in retrospect, but it shows you just how compelling — and menacing — these criminals can be in the moment. They also refined their pitch to avoid detection. For example, they can send consumers from store to store on an infamous form of scavenger hunt. Their motive: to avoid drawing attention to an unusually large gift card transaction. Scammers can also keep consumers on the phone so people can’t check things with a trusted family member or friend. They even advise consumers on what to say if a vigilant store cashier asks about a suspicious gift card transaction.

According to the Data Spotlight, scammers have become demanding enough to demand What cards to buy and or to buy them. In the first nine months of 2021, more than twice as much money was lost by scammers who demanded Target gift cards as by the next brand on the list. Google Play, Apple, eBay and Walmart cards followed. When scammers told people where to buy cards, consumers who said they were losing money were most often sent to Target stores, but Walmart, Best Buy, CVS and Walgreens were also mentioned.

What else does the Data Spotlight reveal?

  • Reports of gift card scams and losses are on the rise. The number of reported gift card scams has increased every year since 2018. Total losses have also increased.
  • Individual losses are on the rise. Consumers report losing significantly more money to gift card scams. Losses of $5,000 or more have fallen from around 8% of reports in 2018 to around 14% in the first nine months of 2021. Median losses reported have risen from $700 to $1,000.
  • Scammers target the target. When scammers tricked people into buying Target cards, consumers suffered a reported median loss of $2,500 in the first nine months of 2021, far more than any other card. 30% of people who paid with a Target card said they lost $5,000 or more.

Reputable retailers don’t want their good reputation sullied by scammers. That’s why the FTC has created a Stop Gift Card Scams Toolkit with resources to help businesses alert consumers to the risk of gift card scams. By using point-of-sale signs, checkout alerts, and social media posts, businesses can help protect their customers from this form of fraud.

The FTC also has advice for consumers on spotting a gift card scam. The message is simple: gift cards are for gifts, not payments. Period.

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