Unwrapping the Truth: The Hidden Dangers of Gift Card Fraud

Did you get any gift cards for the holiday season? Before you start spending, you may want to check your gift cards.

• Is it the real deal or fake?
• Is there truly money on the cards?

Gift cards are like candy to fraudsters for their availability and convenience. Using shady tactics, scammers can trick buyers into giving away gift cards and sharing access codes. The victim is instructed to purchase gift cards and load a large amount of money onto them. The gift cards then become a means of payment in a scam.

The Federal Trade Commission reports that scammers have stolen at least $217 million through gift cards in 2023. In the FTC’s annual Consumer Sentinel Network data book, more than 41,000 fraud reports were received.

Whether you’re receiving or buying a gift card, look out for any signs of a gift card scam and know how to protect yourself and your money.

Watch Out for Scams

Gift cards are great for the holidays or special events but may come with hidden dangers. Before you think about the next gift card purchase, consider what approaches scammers may use to get access to your money, such as the following:

Gift card draining: Scammers copy the bar code, CVV number, PIN or activation code below the packaging. Then, they reseal the card, wait for someone to purchase and load money, and spend the funds before the victim can. They may also swap the real gift cards with counterfeit versions. When money is added to the tampered card, scammers can access it online and steal the balance.

Impersonation: Scammers may pose as a utility worker, government official, friend or family member, or business to contact you. They immediately create a fake scenario, such as an emergency, and ask you to send gift cards to solve the issue. The scammers may push the victim for card numbers and PINs, leaving the victim with a financial loss.

Online gift cards: Don’t purchase gift cards online through a resale or auction site. Scammers already have the card information, so once activated, the money is spent.

Winning a prize: Scammers may contact the victim to award them a prize. To collect, the victim must send a gift card to cover fees or other charges. The gift card funds are spent with no prize awarded.

Dating website: Scammers create fake profiles on dating sites to draw victims into sending gift cards. They aim to exploit victims’ emotions by creating a fake emergency that needs financial assistance. Scammers ask for gift card numbers from specific stores, giving them direct access to the funds.

Sending a check: Be careful when selling items. A scammer may contact a victim to purchase an item, give them a check for more than the set price, and ask for the difference as a gift card. Victims try to deposit or cash the check only to find out it’s fake.

Protecting Yourself from Fraud

Remember that gift cards are for gift giving, not payments. If someone tells you to buy one for the gift card number, it’s a scam.

Protect yourself and your gift card recipients:

• Purchase from physical and online stores you know and trust.
• Don’t buy in bulk. If you’re asked to buy a variety of gift cards, it’s a scam. This allows fraudsters to break up the amount, making them more difficult to track.
• Consider electronic gift cards instead of physical ones.
• Keep your receipts and copies of the gift cards to help you file a report with the gift card company.
• Check the gift card balance at the retailer or in the retailer’s mobile app.
• Treat the cards like cash. If available, register the card with the brand or retailer who issued it and change the PIN. This protects you if the card lost or stolen. Your gift cards may be more vulnerable to theft if you don’t use them right away.
• Keep your gift cards in a secure place, such as your wallet or purse. If the card has a PIN, don’t scratch it off until you’re ready to use it.
• Inspect the gift card for any tampering, such as blurry printing, incorrect barcode or damaged security strip. The gift card should be sealed with the protective cover and tape are covering the PIN.
• Read the terms and conditions for any fees, expiration dates, and more.
• Secure your home computer. Hackers may gain access to your gift card information, including card numbers. Always update your security software, use strong passwords, and enable multifactor authentication when available.

If you fall victim to a gift card scam, document everything, including any communications with the scammer. Immediately contact the gift card company to report gift card fraud and request a refund. Some companies may offer protections against fraudulent transactions. Then, report online to the Federal Trade Commission. Consider reporting the fraud to:

1. Local law enforcement. Give them any information about the scammer and your financial losses.
2. Your financial institution. Your accounts may have been compromised if you used your payment information to buy fraudulent gift cards.

Keep Yourself Informed and Safe

Check out our Fraud Protection section to stay updated on the latest scams and ways you can protect yourself. Adirondack Bank also offers options to keep your accounts safe, including secure alerts through Notifi and CardGuard. Reviewing your transactions and tracking your spending are just some ways you can monitor for fraud.

If you think you’re a victim of fraud or a scam, contact us at 1-877-404-2265, Option 1 to talk to our Client Services department.

The information in this article was obtained from various sources not associated with Adirondack Bank. While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. Adirondack Bank is not responsible for, and does not endorse or approve, either implicitly or explicitly, the information provided or the content of any third-party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. These suggestions are not a complete list of every loss control measure. Adirondack Bank makes no guarantees of results from use of this information.