Gift Card Scams and How to Spot Them

It never seems you'll be the one to fall for the cheap tricks of scammers, especially ones involving payment by gift cards. Until you actually get scammed. We must understand that there are thousands of scams happening every day. It's a numbers game for the scammers.

According to the Federal Trade Commission, fraud losses top 10 billion dollars each year. Fraudsters make more money than some legitimate industries. They have fine-tuned some clever ways to separate you from your money. The best strategy is to learn how to spot them.

Why Gift Cards Are Used by Scammers?

Gift cards are a preferred payment method for scammers and are becoming more and more popular each year. Gift cards can be virtual or physical to represent a pre-paid amount that is topped up in a card and can be exchanged for goods and services.

Open-looped gift cards can be filled up multiple times and used at different stores. They are usually distributed by banks and other financial institutions. These are not the cards scammers often use.

Closed-looped gift cards are the favorite payment method of online fraudsters. They have a pre-determined amount that the victim pays, and then the scammer can spend it in specific shops. There are hundreds of gift cards available, such as those from Amazon, Google Play, Xbox stores, Walmart, etc.

Scammers use gift cards because it's difficult to trace them. Bank transfers and most other payment means can be traced by governments to determine who the final beneficiary is. Gift cards do not follow such strict processes. 

That's why they are also irreversible. Once you give away a gift card to someone, the money is gone for good. Even if the store has some information about the user of a gift card, scammers often use fake profiles with different aliases to make purchases. Gift card sums are usually too small for anyone to bother.

Where Are Gift Cards Used Normally?

The obvious answer is, well, gifts. If you don't know what present to buy for a friend or a relative, a gift card can take away that burden. However, they are also often used as a promotion by stores to encourage customers to purchase more goods. It's also a good way to compensate angry customers for any hassle they have encountered.

Gift cards are also a good way to get paid for remote online work. For example, legit surveys for gift cards pay money this way to take away the burden of money transfer fees and taxes. It's a win-win situation for everyone. Users earn money they can spend in real shops, and the platform doesn't have to worry about global payment methods.

But the difference from online scams is that instead of receiving gift cards, you will be asked to pay for them. The only legit cases where you buy gift cards are when you do it for yourself, your friends, or for someone who works for you.

How Do Gift Card Scams Work?

As with all scams, gift cards involving one start with the initial contact. It can be a text message, email, or interaction on social media. The second part usually involves luring the victim to get its trust and then, thirdly, finding a way to ask for money.

The exact reason why the scammer asks for your money depends on the type of scam. Usually, it's the point with the most obvious red flags, as the scammer will have to justify not only why he is asking for money but also why he is asking for payment in gift cards instead of other methods.

Tech support scams

The most common variation of this scam starts with a simple phone call. A person usually imitates a representative of some big tech company, such as Microsoft or Apple. He then will tell you something is wrong with your computer and require remote access.

Now, in some cases, a virus or other malware is already planted in the victim's computer. Then, remote access isn't necessary. The scammer can simply request a payment right away. In other cases, remote access creates problems that don't exist.

It might involve installing some hardware or changing some settings in the operating system to create the illusion that there are problems. Then, he will ask you to pay to fix them and will hold your PC hostage until it's fixed.

Romance scams

Such scams usually occur on dating sites and social media platforms. Scammers are looking for vulnerable victims, trying to interact with them and see if it will be possible to extract payment.

The most crucial part for the scammer is to create a romantic relationship with the victim. In some cases, even real models are used to video chat with victims and create an illusion that there is a genuine person with a romantic interest.

After some time, the scam artist will start asking for money from the victim. Often, it's some sort of alleged emergency or a lucrative business opportunity that requires an upfront payment.

Gift cards are used here frequently to justify people in paying for a romantic partner's expenses. Sometimes, it's straightforwardly stated that it's to avoid taxes or banking fees.

Lottery prize scams

These scams spread most via spam emails. A victim gets a message that he has won a prize, but in order to collect it, he needs to cover some costs first. This scam is effective because it plays on the psychological want to win something that everyone has.

To make it more effective, scammers creat a sense of urgency as if you won't receive your winnings without making a payment in time. Often, these scams ask you to buy gift cards to win them.

Conclusion

Gift cards aren't exclusively used by scammers, but their anonymity and irreversibility make them a great payment option for extracting money from victims. Understanding what gift cards are and how related scams work will make you more immune to them.