Gift Card Scams

For scammers, nothing is sacred or beyond their imagination.

A gift card can be the perfect present for almost anyone, since it has the personal touch lacking in a cash gift, while avoiding the danger of giving something unwanted or unneeded. A few general categories of gift cards are especially popular. First there are the ones for online services, such as Apple iTunes, Google Play, Amazon, and others. Then there are major brick-and-mortar retailers such as Ikea, Walmart, Target, among others. Finally, Visa and Mastercard prepaid gift cards operate like debit cards.

All of them are marketed as being “easy to give” and “fun to receive.” And it turns out that they’ve really become a lot of fun to receive if you’re a scammer. And it’s all due to the fact that the stored value on the cards is essentially untraceable and, once it’s spent, the transactions are irreversible.

Scammers are phoning victims at random and demanding payment for their supposed debts, or those of their relatives, including hospital bills, bail and utility bills, using a variety of payment methods, but increasingly through 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 has published an alert of its own, adding that fraudsters are even impersonating Internal Revenue Service (IRS) and Treasury Department officials and demanding payment through gift cards for supposed back taxes or fees. Rather than asking for payment by check, credit card, cash, or wire transfer, however, they request it in gift cards.

The Federal Trade Commission, in its own warning, notes that the scammers, posing as tax collectors, often threaten their intended victims with arrest should payment not be met immediately. In addition to gift cards, the scammers also have been known to demand payment using other gift programs, or even PayPal, Western Union and MoneyGram. While wire transfers have traditionally been their preferred payment vehicle, increased awareness among consumers has encouraged scammers to look for new avenues.

iTunes and Other Gift Card Scams Have Gone International

This is not just an American phenomenon.  Scammers the world  over learn from their colleagues.  In the United Kingdom, Her Majesty’s  Revenue and Customs reported that there were at least 1,500 iTunes gift card cam 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,  since it represents only the cases that were reported to the  authorities.

Down under at the other end of the planet, the in Australian Consumer and Competition Commission reported that 1,236 people, predominantly elderly, had lost almost AU$480,000 to iTunes gift card scams in 2015 and 2016.  Losses in December 2017 alone were estimated to reach AU$100,000.  The scammers typically claimed to be calling from the Australian Tax Office to demand back taxes.

In New Zealand, one 81-year old woman was scammed out of 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 saved from falling victim by a supermarket clerk who assumed something was fishy when she requested to buy an unusually large amount of iTunes gift cards.  It turned out that she had been told by scammers that she was due NZ$6,000 in back pension, which would be transferred to her on condition that she 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.