Gift Card Scams

For criminals, gift card scams are a preferred way to steal your money.

A gift card can be the perfect present for almost anyone. It has the personal touch lacking in a cash gift, without the fear of giving something unwanted or unneeded. A few general categories of gift cards are especially popular. Peddlers of gift card scams know exactly which ones they are.

Gift cards generally fall into three categories. There are gift cards for online services, such as Apple iTunes, Google Play and Amazon. Then there are gift cards for major brick-and-mortar retailers such as Ikea, Walmart and Target. Finally, there are Visa and Mastercard prepaid gift cards, which operate like debit cards.

All gift card issuers advertise them as being “easy to give” and “fun to receive.” Of course, they’re especially fun to receive if you’re a scammer. And it’s all due to the fact that once the scammers use them, the transactions are irreversible.

How Do Gift Card Scams Operate?

Scammers phone victims at random and demand payment either for their supposed debts or those of their relatives. These supposed debts are typically for hospital, telephone or utility bills, bail, or back taxes. For many years wire transfers were the payment vehicles that scammers preferred. Increased awareness among consumers, however, encouraged scammers to look for new avenues. As a result, they moved into gift cards. As Apple warns on its website:

“Regardless of the reason for payment, the scam follows a certain formula: The victim receives a call instilling panic and urgency to make a payment by purchasing iTunes Gift Cards from the nearest retailer (convenience store, electronics retailer, etc.). After the cards have been purchased, the victim is asked to pay by sharing the 16-digit code on the back of the card with the caller over the phone.”

To underscore its concern over the widespread success of these scams, the U.S. Treasury Department published an alert of its own. It warns that fraudsters, impersonating Internal Revenue Service (IRS) and Treasury Department officials, are demanding payment for supposed back taxes or fees. They don’t ask for payment by check, credit card, cash, or wire transfer, however. They request it in gift cards.

The Federal Trade Commission issued its own warning. It notes that scammers, posing as tax collectors, often threaten their victims with arrest should payment not be made immediately. In addition to gift cards, scammers also may demand payment using other gift programs, or even PayPal, Western Union or MoneyGram.

They’re Now International, Too

This is not just an American phenomenon. Scammers the world over learn from one another. In the United Kingdom, Her Majesty’s  Revenue and Customs reported that there were at least 1,500 iTunes gift card scam victims in Britain in 2017 alone. Most were pensioners  and their average loss was £1,150. If you do the math, that amounts to £1,725,000 in stolen funds. That’s undoubtedly the tip of the iceberg. After all, it represents only the cases that the authorities know about.

It’s not much better Down Under. The Australian Consumer and Competition Commission reported that 1,236 people, predominantly elderly, lost almost AU$480,000 to iTunes gift card scams in 2015 and 2016. Estimated losses in December 2017 alone reached AU$100,000. The scammers typically told victims that they were representatives of the Australian Tax Office.

In New Zealand, one 81-year old woman lost thousands of dollars in January 2018. To gain her trust, the scammers, who claimed to be calling from a government agency, transferred NZ$1,000 into her bank account, supposedly as a grant. Afterwards, they promised her an additional NZ$6,000 in exchange for NZ$5,200 in iTunes gift cards, which she purchased for them. They spent her money within six days.  Another New Zealand retiree, an 88-year-old woman, was luckier. A supermarket clerk assumed something was fishy when she requested to buy an unusually large amount of iTunes gift cards and alerted her that it might be a scam. It turned out that it was. The scammers who targeted her told her she was due NZ$6,000 in back pension, which would be transferred to her on condition that she first provide them with NZ$1,200 in gift cards.

If you think you’ve been the victim of an iTunes gift card scam, contact the fund recovery experts at MyChargeBack.