Beware of Gift Card Scams

Everyone loves a gift card for their favorite retailer or restaurant. It's like getting money to spend in any way you please! But, unfortunately, scammers also love gift cards to pull off scams. Here's what you need to know about gift card scams and how to avoid them.

How the Scams Play Out

There are several ways scammers utilize gift cards to con victims out of their money:

• The IRS gift card scam. A person receives a threatening message allegedly from the IRS and claims they are at risk of arrest for tax evasion if they do not pay up immediately. However, they insist that payment can only be made in the form of a gift card. Often, the scammer will ask specifically for an iTunes gift card.

• The tech support gift card scam. A caller pretends to represent tech support at a recognized company, like Apple or Microsoft. They'll insist there is something wrong with the victim's computer and offer to "assist" fixing the problem. Payment can be made with a gift card, of course. Lucky for you, there is nothing wrong with your computer, but you've just been targeted by a scam and are at risk of getting tricked.

• The sweepstakes gift card scam. Congratulations - you've won a trip to the Cayman Islands! But first, you have to pay the small processing fee via gift card. Follow the directions, and you'll never see that vacation and lose the money you spent on that gift card. 

• The utility gift card scam. You don't want your gas or electricity cut off, do you? If you don't pay up with a gift card, the lights might go out. Of course, they won't, but if you fall for the call, you'll be out the money you spent on the gift card.

• The balance-check gift card scam. You spot a discounted gift card for sale online and happily purchase the card. The seller will send you the card but then ask you to read the numbers over the phone to confirm the balance. If you comply, the seller now has all the information they need to use up all the funds on the gift card.

How to Spot a Gift Card Scam

A little bit of knowledge goes a long way in recognizing gift card scams:

• The IRS will never initiate correspondence by phone call, text message, or email. Instead, they will send a letter to taxpayers through the U.S. postal system. 

• No authentic business or government agency will insist on payment by a gift card.

• If you don't recall entering a sweepstake, chances are you didn't win it either.

• A caller or message claiming a matter is urgent and demands immediate action is nearly always a scam. 

Generally, gift cards should be used for purchases or sent as gifts, not as payments. Also, never share the numbers on gift cards over the phone or online. Finally, it's best to only purchase gift cards through reputable sellers or those with excellent customer reviews and/or offer a cash-back guarantee.

 If You've Fallen Victim to a Gift Card Scam

First, contact the company that issued the card as soon as possible. You can find the customer service number for most companies on the card itself or through a simple Google search. Tell the representative what happened. If you still have them, hold on to the receipt and the actual card for proof should it be required. 

Next, if the scammer continues to contact you by phone, text message, or email, do not engage further. Instead, block the scammer's number from your mobile device and mark their emails as spam.

Finally, report the incident to the Federal Trade Commission and alert your family and friends about the scam.