Protect Your Money From Gift Card Scams in 2020

Digital gift card sales are set to increase by US$527 billion by 2024, making gift card scams a very profitable venture for international criminals

Leading e-commerce companies continue to develop new marketing strategies to increase brand awareness and ultimately secure additional customers. One such strategy includes the introduction of gift cards, which motivate consumers to visit a company website, familiarize themselves with the brand and ultimately become loyal consumers. Gift cards help to improve the total sales of e-commerce companies, and this growth is expected to expand over the next few years.

The increased popularity and use of gift cards by consumers, however, make them a highly favored target for scammers and online criminals. According to the global technology and advisory company Technavio, the gift card market is expected to increase by US$527.11 billion between 2020 and 2024.

Currently, “iTunes gift card scams”, “eBay gift card scams” and “ Amazon gift card scams” are trending on online searches as the number of fraudulent activity increases. Retailers are, therefore, warning consumers to take extra care when purchasing gift cards as we move closer to the holiday season.

How Do Gift Card Scams Work?

While gift cards look and feel like ordinary credit cards and debit cards, they are not governed and protected by the same terms and conditions set out by the credit card networks. This gives scammers the ability to employ innovative techniques to defraud consumers. Gift cards scams can, therefore, include incidents of petty crime all the way up to major operations organized by international crime syndicates.

The following are a few examples of how criminals target companies that utilize gift cards:

Stolen Credit Card Information to Purchase Gift Cards

Card-not-present fraud dominates online gift card scams. In this instance, criminals use stolen credit card information to purchase gift cards online to resell for cash. Unfortunately for the merchants, they are hit with chargebacks once the fraudulent charges are discovered by the cardholder.

Requesting a Gift Card Over a Refund

Here, the criminal makes an online purchase with stolen credit card information. Once the transaction goes through, a call is made to cancel the purchase and for the refund to be given on a gift card. Since it’s impossible to trace the gift card, the merchant cannot recover the money he coughed up on a chargeback.

Merchant Hacks

Email phishing attacks, employee corruption and unintended data exposure are other techniques employed by scammers to obtain large consignments of gift card information.

Consumer Hacks

Scammers are able to gain access to credit card information and loyalty accounts to convert the accumulated rewards into digital gift cards. 

In-Store Tampering

A common deception involves scammers who expose gift card PINs by peeling back the stickers and recording the card numbers. Once the card is activated, they make their required purchase for the balance left on the card.

Code Cracking Software

Another option employed by scammers is to use software programs that search millions of possible combinations of a PIN and card number on a gift card. Once the codes have been cracked, the cards are used personally or sold online.

Tips to Avoid a Gift Card Scam

There are a number of quick and easy ways to ensure your gift card purchases are safe and secure:

  1. According to experts, the most secure method to purchase gift cards is to purchase them online, which are much harder for scammers to access. 
  2. If you do choose to purchase gift cards from shops, select the stores that keep cards close to or behind the counter, since they are much harder to tamper with.
  3. Check to ensure that the card’s packaging, including bar cards and decals, have not been tampered with.
  4. Scratch off the PIN covering only once you are ready to use the card.
  5. If you receive a gift card as a present, try to use it as soon as possible to avoid any loss or theft.
  6. For increased protection, gift cards can be registered with a personal username and password.
  7. Remember to keep tabs on the available amount on your gift card in the event that you need to report any fraudulent activity.

If you are the victim of a gift card scam, contact MyChargeBack. We are an American financial services firm specializing in complex, card-not-present dispute resolution. Working with over 800 banks worldwide, we have assisted clients on every continent recover millions of dollars in assets that they thought they lost for good.

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