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Gift / Prepaid / Reward Cards

Gift / Prepaid / Reward Cards

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The money you put on gift cards is like cash — once it’s spent, you almost certainly can’t get it back. Fraudsters have developed two distinct fraud tactics for gift cards: payment scams and outright gift card theft.  Fraudsters commonly use Amazon, Walmart, iTunes, eBay, Target, and other popular gift cards as cash conduits in impostor and phone scams. eBay is currently the most popular card requested by fraudsters.

Prepaid Cards

Types of crimes:
  • Fraudsters can purchase prepaid cards with stolen credit card information. Most prepaid card providers have established law enforcement escalation numbers, which can be reached by calling the phone number on the back of the prepaid card and requesting the law enforcement or fraud/risk hotline.
  • Another type of fraud occurs if you receive a credit, debit, or prepaid card in the mail (other than a renewal of an existing card) that you did not request or apply for the specific card. This can indicate that you may be a victim of identity theft fraud.
  • Card reloading fraud: Fraudsters get gift cards that they didn't pay for and call the company that loads them. They claim to be from the payment processor and trick a representative from the company to keep loading the card so they can use an ATM to offload free money. 
  • Stolen cards: Fraudsters physically steal activated prepaid cards and use them to purchase items. 
  • Advance fee scams: You've probably heard of these before. Someone gets an email telling them there's a lot of money coming their way if they just pay a little fee upfront to handle taxes or customs or some other issue. Traditionally these scams have been conducted using wire transfers, but these days many fraudsters ask the victim to buy a prepaid card and use that, making the purchase harder to trace.
  • Tax fraud: Many states and the federal government allow refunds to go to prepaid cards. Some fraudsters complete tax forms using information from stolen identities and then load the cards with their ill-gotten refund.
  • Repair fraud: An individual receives a call from someone claiming to be from a major technology company who asks for remote access to their computer. They then suggest that the computer is full of malware or that their identity has been stolen, and attempt to get the person to buy a prepaid card or to give them access to their bank accounts to check their security. In either case, these fraudsters get the gift cards and then cash them in elsewhere and take the money. 
  • Swapped cards: A fraudster surreptitiously opens the packaging of a reloadable prepaid card in the store and swaps it with an identical card they've purchased themselves and cloned. When a customer buys the swapped card and adds funds to it, the fraudster steps in and uses those funds, via the cloned card, to make purchases or ATM withdrawals.
  • Skimmed cards: A fraudster skims the card information from the magnetic stripe of a prepaid card in the store. When a customer purchases and activates the card, the fraudster uses the skimmed card information to make online purchases.

Gift Card Phone & Online Scams

Always Remember - Gift Cards are for gifts and not for payments.

  • Government official - A fraudster claims to be with a federal or state agency and is calling about a fake debt.  The callers try to pressure you for payment through a prepaid gift card and may threaten you with punishment if you do not comply.  Keep in mind that NO government agency or reputable business will EVER ask for payment with gift cards.
  • Online romance or dating relationships where a gift card is used to send someone money.
  • Tech support warns you about a computer virus or other issue that needs to be resolved.  Other tech support scams may offer you a refund for overpaid services of software.
  • Someone posing as a retailer offering deals and promotions on gadgets, televisions, and other consumer electronics.
  • Callers pretending to be from a utility company telling you to pay your bill by gift card or they’ll cut off your power or water.
  • Someone impersonating your boss either using a spoofed email address or by hacking into their account.
  • Sellers on online auction sites who ask for gift cards to “buy” big items like cars, motorcycles, boats, RVs, tractors, and electronics.
  • Someone posing as a military service member to get your sympathy, saying he has to sell something quickly before deployment and needs you to pay with a gift card.
  • Callers who say you’ve won a so-called prize for a sweepstake you probably never entered – but first, you have to use a gift card to pay fees or other charges.
  • Someone buying something from you probably online, who sends a check for more than the purchase price – and asks you to give them the difference on a gift card. 
  • Scam when fraudsters pay you for a card (or the code on the card), but then dispute or cancel the charge after they have already used the gift card.
  • Scam when fraudsters ask you to buy a bunch of gift cards in exchange for an item on an auction site - and then never actually send you the purchase.

Protect yourself against gift card phone and internet scams: 

  • Do not read or text the PIN number on the back of a gift card to anyone as scammers can use the number like they can use cash. The scammer uses that information to get the money you’ve loaded on the card. Don’t give them those numbers. It’s a scam. You’ll lose your money, and you won’t be able to get it back.
  • Government agencies or reputable businesses don’t rely on gift cards for payment.
  • Only use gift cards at reputable online stores.
  • Do not use gift cards to send money.
  • The scammer says it’s urgent. They tell you to pay right away or something terrible will happen. They try to pressure you into acting quickly, so you don’t have time to think or talk to someone you trust. Don’t pay. It’s a scam.
  • The scammer tells you which gift card to buy. They might tell you to put money on a Google Play, Target, or iTunes gift card — or send you to a specific store like Walmart, Target, or CVS. Sometimes they tell you to buy cards at several stores, so cashiers won’t get suspicious. If so, stop. It’s a scam.

Gift Card Exchanges

Gift card exchanges are useful for gift cards that go unused – like when you receive a gift card from a store where you don’t frequently shop. Gift card exchanges allow consumers to sell their gift cards for a payout that is less than the gift card’s value, and purchase other previously owned gift cards at a discount.  Not gift card exchanges all offer equal experiences to shoppers.  Here are some tips to consider when using a gift card exchange:
  • When selling a gift card, expect to make less than the value of the card. A shopper selling a $100 gift card to a gift card exchange will not receive a $100 payout. The exact amount of payout will depend on the exchange used and the demand for the particular card being sold.
  • Select gift card exchanges that verify the balance of gift cards before selling to shoppers. This will help protect you from buying cards that might carry less value than advertised, or that could even be empty. (An important consideration since gift cards sold via gift card exchanges are previously owned goods.)
  • Use gift card exchanges that offer post-purchase guarantees. Reputable exchanges will offer you a guarantee that the cards you purchase are legitimate and verified.
  • Pay attention to how and when the payout will happen. Some gift card exchanges found in retail locations will only offer payment via store gift cards. Online exchanges may offer payment via a mailed check, direct deposit, or PayPal. Also, some exchanges may take lengthy amounts of time to pay sellers, and/or may not have practices in place that protect sellers in the event their payout is lost in the mail. Reputable exchanges will offer to track a payment shipment.
  • Make sure the cards purchased or sold online do not have additional fees associated or expiration dates that have already passed. It is not uncommon for some third-party resellers to neglect to tell buyers that the cards they purchased are about to expire.
  • Don’t buy and sell gift cards to/from unknown individuals. Make sure to use genuine gift card exchange companies versus private sellers on Craigslist or other sites. These individuals do not offer any guarantees to protect you and could end up being criminals.

Protect yourself from other types of gift card fraud:

  • Don't buy gift cards displayed prominently within the store.  Ask sales clerks to sell you cards from the back room or behind the customer service desk.
  • Examine cards and packaging for signs of tampering.  Don't buy a card where the coating covering the PIN number has been scratched away or the activation sticker isn't firmly affixed.  Examine the protective scratch-off area on the back of the card for evidence of tampering.
  • Check the bar code on the back of the gift card to make sure that it has not been tampered with.  For example, the barcode should feel smooth and not raised.  Fraudsters have been known to glue a fake bar code over the real bar code.  In this situation, the money you spend to purchase the gift card is diverted to a fraudster's gift card at the time of purchase.  This would result in your gift card having a zero balance since the money that was loaded was transferred at the time of purchase. 
  • Spend the gift card as soon as possible. Don't put the card in a drawer for months. 
  • Beware of online exchanges and auction sites.  Online buy cards from reputable online exchanges or auction sites because of the possibility of buying stolen cards. 
  • If you purchase gift cards to give as gifts, ensure they come from a reputable and trusted source.
  • Consider gift cards the same as cash and secure them like you would your wallet.
  • Check reviews of any website you use.
  • Always review gift card balances before and after purchasing the card.
  • If you sell a gift card, don’t give out the card’s PIN until your payment transaction is complete.
  • Beware of social media postings offering vouchers or gift cards: Fraudulent messages can sometimes appear to have been shared by a friend when they really come from a fraudster.

Report Gift Card Scams

What if you paid a scammer with a gift card?  If you paid a scammer with a gift card, tell the company that issued the card right away. When you contact the company, tell them the gift card was used in a scam. Ask them if the money is still on the card, and if they can refund your money. If you act quickly enough, the company might be able to get your money back. Be aware that some companies will not return any money even if the gift card hasn't been used. Remember to keep the gift card itself, and keep the gift card receipt. Also, tell the store where you bought the gift card as soon as possible.

Here is a list of cards that scammers often use – with information to help report a scam. If the card you used is not on this list, you might find the gift card company’s contact information on the card itself.

  • Call 1 (888) 280-4331
  • Keep the Amazon card itself and your receipt for the Amazon card.
  • Learn about Amazon gift card scams, and how to report them here.
  • Call 1 (866) 305-3229 right away. Say “representative” after the first prompt. Then say “gift card” after the next prompt to connect with a live representative.
  • Forward suspicious emails about Ebay gift cards you bought to Include the first 9 digits of your Ebay gift card.
  • Keep the Ebay card itself and your receipt for the Ebay card.
  • Learn about Ebay gift card scams, and how to report them here.
Google Play
  • Call 1 (855) 466-4438
  • Report gift card scams online here.
  • Keep the Google Play card itself and your receipt for the Google Play card.
  • Learn about Google Play gift card scams and how to report them here.
  • Call Apple Support right away at 1 (800) 275-2273. Say “gift card” to connect with a live representative.
  • Ask if the money is still on the iTunes card. If so, Apple can put a freeze on it. You might be able to get your money back from them.
  • Keep the iTunes card itself and your receipt for the iTunes card.
  • Learn about iTunes gift card scams and how to report them here.
  • If you have a Steam account, you can report gift card scams online here.
  • Keep the Steam card itself and your receipt for the Steam card.
  • Learn about Steam gift card scams and how to report them here.
  • Call 1 (866) 795-7969
  • Keep the MoneyPak card itself and your receipt for the MoneyPak card.
  • Learn about MoneyPak gift card scams and how to report them here.

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