Why Do Scammers Want Gift Cards?

Is Someone Asking You To Pay With Gift Cards? It’s a Scam

When an Illinois woman received a check in the mail for $4,700 with instructions to buy eight $500 prepaid gift cards and pocket the remaining money, she thought it was her lucky day [*]. 

But a few days later, the check came back as fraudulent — and the $4,000 she’d used to buy the gift cards came out of her account. When she texted the number to which she’d sent pictures of the gift cards (and their PINs), it was disconnected. 

The scary truth is that this is far from a unique story. According to AARP [*]:

“Nearly one in three Americans have been targeted by a gift card scam.” 

Gift cards can offer legitimate ways to purchase goods and services, but the fact that companies treat them like cash makes them prime targets for scammers. 

In this guide, we’ll explain why scammers want gift cards, what they can do with them, and how to avoid the most common gift card scams. 

Why Do Scammers Want Gift Cards? What Do They Do With Them? 

According to the Federal Trade Commission (FTC), gift cards are the most preferred payment method for scammers [*] for a number of reasons:

• Gift cards are almost the same as cash. Once you send a scammer the numbers and PIN on a gift card, they can use it however they want. Certain cards, such as Visa or Mastercard prepaid gift cards, are essentially the same as cash. In some cases, scammers can even buy cryptocurrency using gift cards — giving them an easy way to convert the balance into untraceable funds.
• Gift cards often can’t be refunded, traced, or disputed. Stores can’t trace gift cards, and it’s difficult for consumers to prove they weren’t the ones who used them. Scammers know that as soon as a gift balance is compromised, the money is theirs.
• Scammers can easily sell gift cards online. It’s easy for scalpers to buy multiple gift cards at once, record the gift card codes and numbers, and resell them online. When buyers activate the cards they purchased, scammers steal the balance.
• Gift cards are readily available and easy to buy and sell. Nearly every big box department store, drug store, and convenience store has a rack full of gift cards waiting to be purchased. Buying them doesn’t necessarily look suspicious, and selling them online is a breeze.
• Cards aren’t tied to an individual or account. Even if you’re buying a gift card for a specific someone, the recipient won’t have their name tied to it. As far as retailers are concerned, if you have a gift card’s numbers and PINs, it’s yours.

How To Identify a Gift Card Scam Before You Lose Money

Gift cards can be used in almost any scam. Fraudsters may call you claiming to be from the IRS or a company’s tech support department and demand payment through gift cards. Or, they could target shoppers during the holiday season by posting fake discounted gift cards on online marketplaces like Facebook Marketplace.

While these scams can be intricate and sophisticated, there are warning signs that you can learn to spot. 

Here’s how to tell if you’re dealing with a gift card scam:

• You’re asked to pay by gift card for services that should accept other forms of payment. If someone claims to be from the IRS, your bank or utility company, or a similar institution and asks for gift cards, they’re scamming you. These companies and agencies will not ask you to pay with gift cards.
• You’re told to use gift cards to move funds or “protect” your bank balance. Transfers and balance protection are natively built into banking platforms and never require gift cards to move funds or complete a wire transfer.
• The person requesting that you buy gift cards creates a sense of urgency. Fraudsters may request gift cards to stop one of your accounts from being closed or even to “prevent” fraud on one of your debit cards.
• You’re told to stay on the phone while you buy gift cards. Established organizations won’t ask you to buy gift cards, and they certainly won’t keep you on the phone while you’re doing it. Scammers adopt this strategy to ensure victims follow through with their demands.
• Gift cards are located in an open and easily accessible area of a store. In some retail stores, gift cards are displayed without much security. Scammers take advantage of these situations, as they can swipe gift card numbers on the backs of the cards for later use.
• Too-good-to-be-true deals on used gift cards. When scammers sell used gift cards at unbelievable prices, it’s because they’ve already stolen the numbers on the cards. Once you activate one of these cards, you’ll lose the gift card balance.

The bottom line: Gift cards should only be used as gifts — not as payment for services, fines, or goods. If anyone pressures you to buy or send them gift cards, it’s a scam.

Watch Out For These Six Common Gift Card Scams

1. Phone scams asking for payment via gift cards
2. Buying “zero balance” gift cards from stores
3. Scammers on dating sites asking for gift cards
4. A “friend in need” asking you to buy gift cards for them
5. Overpayment scams demanding refunds via gift cards
6. Fake giveaways asking for gift cards to release your winnings

Avoiding gift card scams starts with understanding how they work. Here’s how six of the most common types of scams work, the red flags to look out for, and what to do if you’re the victim of gift card fraud.

1. Phone scams asking for payment via gift cards

Gift card scams often happen over the phone. Scammers pretend to be calling from a company or government agency — and threaten victims with fines, bogus payments and fees, or jail time if they don’t send them gift cards. 

In another common version of this scam, fraudsters call and pretend to be from your bank’s fraud department. They claim that your account has been compromised, and the only way to protect your funds is to transfer your balance to gift cards and then move it to a “secure” account. 

Don’t get scammed! Here’s what to do:

• Never give up money or personal information over unsolicited phone calls. Instead, hang up and contact the company or agency directly to confirm that the call or message was legitimate.
• Don’t pay for fines, fees, or services using gift cards. Reputable companies and government agencies will not ask you to pay this way and will always offer safer payment methods, such as credit cards or bank transfers.

💡 Related: The Latest Google Play Card Scams and How to Report Them →

2. Buying “zero balance” gift cards from stores

Gift card scams don’t just occur over the phone or online. Scammers can copy down gift card numbers and information from displays in store. They may even scratch the back to reveal the PIN, and then cover it with a similar silver scratch-off sticker. When the card is activated, the scammer goes online and drains the balance.

In one recent example, a woman in Williamsville, New York received a Visa Vanilla gift card for her birthday — but when she went to use it, her card payments were denied due to a lack of funds [*].

When she went online to check the card’s balance, she discovered that $50 in Google Music purchases had been made before she even received the card. 

Don’t get scammed! Here’s what to do:

• Run your finger over the back of a gift card before purchasing it. The Better Business Bureau (BBB) reports that scammers are adding new barcode stickers on top of real gift card barcodes that automatically deposit balances into scammers’ gift card accounts [*].
• Avoid buying gift cards with damaged packaging. Scammers may have tampered with the barcodes or already used the cards and PIN numbers.
• Register your gift card if possible. Associating the card with you and your account can help if you need to report a stolen balance later.

💡 Related: 10 Amazon Gift Card Scams You Need To Avoid →

3. Scammers on dating sites asking for gift cards

Americans lost over one billion dollars to romance scams in 2021, according to the FBI [*] — with much of the losses occurring in the form of gift cards. 

In romance scams, fraudsters create fake profiles on dating sites and apps, quickly build relationships with their victims, and then ask for gifts or “help” with a family emergency. The stories can be elaborate, emotional, or even threatening — anything to manipulate the victim into sending gift cards to the scammer.  

Don’t get scammed! Here’s what to do:

• Never send gift cards or cash to people you’ve only met online. Real love interests rarely ask for money; if they do, they probably won’t ask for it via gift cards. Even if you think the person is real or will pay you back, don’t buy them gift cards.
• Insist on meeting in person. Calling, texting, or messaging through an app can conceal a scammer’s identity, so try asking to meet the user in person. If you do meet, make sure you meet somewhere safe or public, and inform friends of where you’re going and whom you’re meeting. 
• Report romance scammers to the dating app or site. They may be able to trace the IP address and ban the person from the platform.

💡 Related: The Unexpected Dangers of Online Dating →

4. A “friend in need” asking you to buy gift cards for them

Scammers are notorious for hacking people’s social media and email accounts in order to scam their contacts. One common tactic is to use hacked accounts to ask friends and family to buy gift cards for them. 

In one example, three women were targeted in a “friend in need” scam when their mutual friend’s email account was hacked [*]. Scammers asked the women to help her buy gift cards for her niece’s birthday and send pictures of the card’s information to a different email address. 

Luckily, two women didn’t comply, allowing law enforcement to step in and shut the scammer down.

Don’t get scammed! Here’s what to do:

• Analyze the message. Did the person create a false sense of urgency or use phrases and words that your friend wouldn’t use? Is the message vague? If anything feels off, don’t give in to any requests.
• Confirm the message with your friend or family member. If your friend doesn’t know what you’re talking about, tell them they may have been hacked — and immediately stop contacting the person who is impersonating them on social media.

💡 Related: Was Your Email Hacked? How To Know and What To Do →

5. Overpayment scams demanding refunds via gift cards

Some scammers target sellers on eBay, Etsy, Craigslist, or similar sites — with generous offers via checks. The only catch is that you’ll need to refund them the “extra” amount via gift cards. 

But the checks are fake, and any money you send to the scammer via gift card will eventually be withdrawn from your account.

In another variation of this gift card scam, fraudsters claim to be representatives from Amazon, Apple, or other large companies, and tell you that too much money was refunded from an earlier purchase. To avoid negative consequences, they demand that you send a refund via Walmart, CVS, or eBay gift cards [*].

Don’t get scammed! Here’s what to do:

• Don’t accept extra payments for items online. Any offer to prepay for shipping or cover additional fees is a red flag of a scam. 
• Ask for proof of identification. Scammers won’t have this, so they will either stop communicating with you or double down on the urgency of their request — another sign that their offer is fake.

6. Fake giveaways asking for gift cards to release your winnings

Scammers use elaborate sweepstakes schemes or pose as legitimate institutions like Publishers Clearing House to trick victims into thinking they’ve won a car, laptop, or lump sum of money. But in order to collect your prize, you must first pay for “taxes” or “fees” with gift cards. 

Don’t get scammed! Here’s what to do:

• Never pay to win. Legitimate sweepstakes won’t make winners pay for prizes — they’re free. You might be asked to verify your identity, but you’ll never have to pay for processing fees, taxes, or handling charges — especially via gift card.
• Paying more won’t help you win prizes. Some scammers hint that paying will increase your chances of winning other prizes. Don’t believe it. Real sweepstakes are free to enter, and winners are drawn at random.

Did You Pay a Scammer With Gift Cards? Do This!

If you’ve already paid a scammer with gift cards, it’s important to act swiftly. Here’s what you can do to try and get your money back: 

Document everything

The more proof you have that you’ve been scammed, the better chance you’ll have of getting a refund from the company that issued the gift card. Try to collect:

• Bank account statements and receipts showing your purchase.
• Phone numbers and email addresses that scammers used to contact you.
• Phone call summaries or copies of emails and text messages.

Stop talking to the scammer

Once you’ve collected your documentation, break off all contact with the scammer. Resist the urge to tell them off, as that could push them to delete conversations and cover their tracks. 

Freeze your credit with all three bureaus

If you gave out any credit card information — and especially if you accidentally exposed your Social Security number — you need to freeze your credit as soon as possible. 

Freezing your credit prevents anyone from opening new lines of credit in your name or accessing your credit score. This is an essential step in protecting your credit from scammers. 

To freeze your credit, you need to contact each of the three major credit bureaus individually: 

• TransUnion: Place a credit freeze online or call 1-888-909-8872.
• Experian: Place a credit freeze online or call 1-888-397-3742.
• Equifax: Place a credit freeze online or call 1-800-349-9960.

Update all of your passwords

If you gave scammers personal information, they could use it to break into your online accounts — such as your bank. Whenever you’re a victim of fraud, it’s a good idea to update your passwords with ones that are secure and unique.

Here are some best practices for securing your online accounts: 

• Use long and unique passwords. The length and uniqueness of a password can be more important than its complexity. Opt for passwords that are at least 10 characters long.
• Store your credentials with a password manager. Aura’s password manager securely stores all of your passwords and can even warn you if your credentials have been leaked in a data breach. With a single click, Aura can automatically update your password to be more secure on select sites.  
• Secure accounts with two-factor authentication (2FA). Adding 2FA makes it much harder for hackers to break into your accounts. For even more security, use an authenticator app such as Authy rather than SMS for receiving 2FA codes. 

Scan your devices for malware

If scammers targeted you online, they may have also infected your devices with malware that spies on you and steals your sensitive information. Install antivirus software and scan your devices to make sure they haven’t been compromised. 

Report fraud to the FTC and local law enforcement

Reporting your case to the Federal Trade Commission (FTC) provides official proof of innocence and can help you dispute any fraudulent charges or accounts opened in your name. You can fill out an FTC Identity Theft Affidavit at IdentityTheft.gov or by calling 1-877-438-4338. 

You can also report cases of fraud to the FTC at ReportFraud.ftc.gov.

In some cases, companies may also request a police report before they issue you refunds or close accounts. You can file a complaint with your local law enforcement agency by calling its non-emergency phone number.

Contact the company that issued your gift card

Gift card issuers may be able to help you get some or all of your money back — depending on your situation and the level of detail in your documentation. Reporting your case will also help companies brainstorm ways to keep consumers’ gift card purchases safe moving forward.

Here’s how to contact a few of the most popular brands that scammers target:

• Amazon: Call 1-888-280-4331.
• Google Play: File a report here.
• eBay: Chat with eBay customer support.
• Steam: Report the scam to Steam support.
• Walmart: Contact its customer support team at 1-800-925-6278.
• Apple (iTunes gift cards): Chat, call, or email from Apple support.

Can Stolen Gift Cards Be Traced or Refunded?

Unfortunately, it’s virtually impossible to trace or get a refund for a gift card that scammers spent. But you can still try contacting each company individually. Every organization has its own policies and handles fraud differently, so it’s worth seeing if it can recover at least part of the money you’ve lost.

When you contact the company, have all of your documentation handy. Their representative will likely want proof that you purchased the card, along with as much evidence as possible to prove that you were not the person who used it.

How To Protect Yourself Against Gift Card Scammers

Knowing the signs of gift card scams and taking appropriate action are the best ways to defend against scammers. Take these actionable steps to avoid becoming the victim of gift card scams:

• Don’t activate gift cards until you’re ready to use them. Also, don’t keep a balance on your gift cards. Scammers can obtain your card numbers and use your gift cards without your knowledge.
• Register your gift card with the retailer (if possible) and keep the receipt. Doing so will help issuers reclaim your stolen balance. 
• Check gift cards for physical damage or signs of tampering (and don’t ever buy used gift cards). Scammers have likely already noted the gift card numbers and are ready to steal the money upon activation.
• Learn to spot the warning signs of a phishing email. Be wary of emails with urgent demands, multiple misspellings, and links and attachments — particularly if they come from unfamiliar domains.
• Hang up on unsolicited phone calls. If the person on the phone tells you they are from a reputable company or agency, hang up and call them back using an official phone number. Keep in mind that scammers can operate over text and email, too. Do not respond to unsolicited texts, and block the numbers. Report suspicious emails as spam.
• Consider monitoring your credit with an identity theft protection service. Aura monitors your sensitive information and financial accounts for signs of fraud and can alert you up to 250x faster than other services. And if the worst should happen, Aura provides 24/7 support from dedicated Fraud Resolution Specialists, as well as $1 million in insurance for every adult on your plan (up to $5 million total coverage) for eligible losses due to identity theft. 

The Bottom Line: If You Have To Pay With Gift Cards, It’s a Scam

While gift cards make convenient gifts, they’re only useful and safe when used for their original purpose. 

Unfortunately, gift card scams continue growing in scope and severity. In the first nine months of 2022, Americans lost nearly $175 million to gift card scams [*], and scammers will likely find new ways to exploit victims in the years to come.

Knowing the signs of a gift card scam can help you avoid the most common forms of attack. But you need protection that will work no matter what new tactics gift card scammers try to use.

Aura’s award-winning identity theft protection safeguards your devices from hackers and warns you of potential financial fraud and identity theft threats before you even realize they are happening. And with Aura’s $1 million per person insurance policy coverage, you can feel confident that your family’s assets stay secured.

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