Gift cards are a common thread among many scams. Consumers may be asked to purchase gift cards to pay off a debt, send fees to collect a sweepstakes or lottery prize, or help someone found on an online dating site.

The impact of gift card scams has spiked in recent years. According to the Federal Trade Commission, gift cards were reported as the payment method in 26 percent of fraud cases through September 2018 versus 7 percent of fraud cases in 2015, and reported losses in gift card fraud jumped from $40 million in 2017 to $53 million through September 2018. Better Business Bureau’s (BBB) Scam Tracker received more than 1,000 reports involving gift card fraud in 2018.

How can you protect yourself from a growing and pervasive scam like this one? Use caution when asked to buy gift cards, says the Consumer Fraud Task Force, a coalition of local, state and federal government agencies and nonprofit business and consumer groups in Missouri and Illinois that work together to protect consumer and donor rights and guard against fraud.

Money applied to popular gift cards like Apple iTunes and Google Play can only be spent on products and services from those companies. However, scammers are coaxing people into purchasing cards and giving them the PIN number off the back of the cards, which allows them access to the funds.

Scammers will pose as a well-known business, family member, friend, government agency or law enforcement in an attempt to defraud someone. These scams, known as imposter scams, count gift cards as their most frequent payment method. The scammers will tell their victim to go to a specific store and purchase a specific card.

In an international scam operation that the U.S. Department of Justice stopped in 2018, fraudsters based in India impersonated officials from the Internal Revenue Service and U.S. Citizenship and Immigration Services. Victims were threatened with arrest if they did not provide funds by purchasing gift cards or wiring money. Ultimately, two dozen members of the conspiracy were prosecuted and sentenced to federal prison, some of them receiving 20-year sentences.

In order to protect yourself from being caught in a gift card scam, the Consumer Fraud Task Force offers the following tips:
● Don’t pay using a gift card. No reputable company will ask for payment using a gift card. If you receive a call demanding that you must pay using a gift card, just hang up. Scammers use scare tactics by threatening you with jail time unless you pay immediately with a gift card. This is a tactic to get your hard-earned
money.
● Register your gift card. If a retailer allows you to register your gift card, take advantage of that option. Registering your card makes it easier to keep track of any misuse and can potentially end up protecting money stored on it.
● Report it. If you believe you have been a victim of gift card fraud, report it immediately to the company that issued the card. It may not be possible to stop funds from being withdrawn, but the company should be alerted to the fraud. Also, file a complaint with BBB’s ScamTracker and with the FTC.

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Article contributed by Stephanie Garland, BBB Regional Director.