Imagine this: you’re on a winter walk with your teen when, suddenly, their cell phone rings.
“Give me one second,” they say, and they answer the phone with a smile and a cheery “hello.” As you wait for your child to finish their call and come back to your conversation, you watch their smile slowly morph into a frown.
They hang up and flash you a worried look. Apparently it was a state trooper on the other line; your child has an outstanding traffic ticket that they don’t remember receiving. This ticket must be paid as soon as possible. There’s a catch, however: your child can only pay their fine via Amazon gift cards.
Something’s fishy. When did your child receive this ticket? And what government organization would demand payment in gift cards, anyway? After some research, you and your teen reach the same conclusion: someone was trying to pull a gift card scam.
What Is a Gift Card Scam?
In a nutshell, a gift card scam is a form of fraud in which criminals trick everyday people into sending them gift card information.
These scams are gaining more and more popularity with financial scammers. Gift cards have fewer protections for buyers than other payment options. While credit card companies can often restore stolen money, gift card companies cannot. Once the card has been used, the money is gone. Gift cards are also untraceable, making it easier for scammers to get away with their crime.
Gift card scammers don’t limit their victims to adults. They may target kids and teens via phone calls, email, video games, or online chat rooms. Surprisingly, CNBC reports that even the most tech-savvy teens may fall prey to online scams faster than their grandparents.
Thankfully, most gift card scams are easy to recognize and avoid. As the Federal Trade Commission reminds us, “no real business or government agency will ever insist you pay them with a gift card. Anyone who demands to be paid with a gift card is a scammer.”
Seven Types of Gift Card Scams
Let’s take a deeper look at seven types of gift card scams and how to avoid them.
1. A Call from Highway Patrol
This is one of the most common forms of a gift card scam. In this scenario, you or a family member will get a call from an unknown number. The person on the other line will introduce themselves as a state trooper and inform you that you have outstanding traffic tickets. To pay for the tickets, they’ll ask you to go to a specific retailer and buy a few dozen gift cards.
Once this errand is complete, they’ll ask you to call you back and read out the gift card information over the phone. Once they get what they’re looking for, they’ll hang up and you’ll never hear from them again.
How to spot this scam: The police will never demand that you pay a fine with gift cards, nor contact you about a traffic ticket via phone. If you get a call like this, simply hang up. If it truly is the police, they’ll find another, more secure way of getting in touch with you.
2. Interrogated by the IRS
In this type of scam, you’ll receive a call from someone pretending to be a member of the IRS. They’ll explain that you are behind in your tax payments. In order to avoid arrest and a tax evasion or tax fraud charge, they’ll ask that you pay your back taxes via Target or GameStop gift card.
How to spot this scam: Like the police, the IRS will never ask for payment in gift cards; after all, what use does a government agency have for $500 to Target? The IRS will also rarely contact you via phone to discuss unpaid taxes. Instead, they’ll send you a few letters warning you about an upcoming due date.
Check out this useful article from the IRS’s website for more tips on avoiding scams from people pretending to be the IRS.
3. The Power Company Pounces
One day, you might get a surprise call from the power company. They tell you that your electricity bill hasn’t been paid in full yet. You’re sure that you paid on time, but they inform you that you’re only days away from losing power. The only way to keep your utilities active is to pay your balance back in full. The power company won’t accept cash, however: they want gift cards.
Are you starting to see a pattern?
How to spot this scam: Like government agencies, your power company will never ask for repayment in gift cards. Instead, they’ll send you an itemized bill through the mail, letting you know how much you have to pay and by when. They’ll also give you plenty of warning before the due date—so if a company employee informs you that you have exactly one day to pay the bill, it’s likely a scam.
4. The Gift Card Bot
Like many things in our increasingly technological world, gift card scams have gone digital.
Rather than go through an elaborate scheme, some scammers will program online bots to do their scamming for them. These bots peruse through the Internet, searching through website after website to find already-activated gift cards.
They’ll then hack into the website and learn the gift card’s number and PIN, then drain the remaining balance themselves. Some scammers may even sell your gift card information on the Dark Web. Talk about freaky!
How to spot this scam: Unfortunately, this scam is impossible to anticipate. You won’t know that it’s happened until you try to use the gift card yourself. As such, the best way to avoid this gift card scam is to use your gift cards as soon as you activate them. This gives bots less time to hack into the Internet and steal your gift card information.
5. The Crooked Cashier
Sometimes gift card scammers are the people you least expect: like the cashier checking you out at the store register.
Typically when you purchase a gift card, it isn’t active until the cashier activates it for you upon check out. This is to protect against gift card theft. In the case of this scam, however, the cashier will activate the gift card, then subtly swap it with a new, unactivated one before handing it back to you. This leaves you with an unactivated, unusable gift card and them with the fully-financed card that you paid for.
How to spot this scam: Keep a close eye on the cashier to ensure that they don’t do any fancy magic tricks to swap out the gift card. Alternatively, you can use the store’s self-checkout to ensure that you’re the only one handling your card.
6. Going Once, Going Twice, Scammed!
Occasionally, scammers will commit their crime on online auction sites like eBay. They’ll use a throwaway account to list a gift card for sale at a discounted price. For example, they may try to sell a $500 Target gift card for a discounted $100. A deal like this seems too good to be true—and it probably is. These discounted gift cards are usually fake, used, or expired. Once the auction is closed, you get a false gift card and the scammer gets your money.
This gift card scam is especially targeted at kids who may search through online auctions to find discounted gift cards for online games like Roblox and Fortnite. Make sure that your kiddos check with you before making any online purchases—especially when buying gift cards on online auction sites.
How to spot this scam: This one’s simple: never use an online auction to buy gift cards! Make certain that you only buy gift cards directly from a trusted retailer.
7. The Fake Gift Card Activation Website
Not all gift cards are activated at the store register. Sometimes, you have to activate them online from the gift card provider’s website.
Here’s the kicker: some scammers create fake websites in order to steal your gift card information. They look remarkably like the real website. Typically, these fake website addresses are only one letter off from the real website’s address, so quick typers or small hands could make a typo and stumble onto the wrong site. Once you enter your gift card info into a fake activation site, the scammer will be able to activate it themselves and steal your funds.
How to spot this scam: Double check that you typed the website address in correctly before you enter any gift card information. You can also check to make sure the site is trustworthy by verifying that the website starts with https:// instead of http://. Similarly, keep an eye out for a little padlock image before the web address—this signifies that a website is trustworthy.
Conversely, many gift cards feature a phone number that you can call to activate the card, so you can avoid using the Internet altogether.
Troomi Keeps Kids Safe from Scams
As you can no doubt tell, there are all sorts of gift card scams out there. Thankfully, these schemes are pretty easy for folks of all ages to spot and avoid. Just remember one thing: no company or government agency will ever ask for payment in gift cards.
We at Troomi believe that kids should be able to use their phone without worrying about scam calls. That’s why smartphones from Troomi Wireless feature SafeListing. This optional feature gives you and your child the power to decide who is able to contact them. With SafeListing, your kiddo doesn’t have to worry about strangers, schemes, and scams. Instead, they can focus on what really matters: family, friends, and fun.