Navigating the Gift Card Minefield

Gift cards are a standard part of the modern shopping experience. But inside that colorful kiosk could be a minefield. Here’s what you need to know before purchasing one.

Gift card sales rose from $130 billion in 2015 to $173 billion in 2021, and while they are popular with consumers they are also popular with criminals because they can be purchased anonymously and redeemed remotely.

Researchers estimate that $40 to $50 billion is stolen from fraud victims in any given year.

There are two typical scams involving gift cards; someone buys a gift card only to later find that the balance on that card has already been redeemed and someone is instructed to purchase gift cards and send the card numbers to a third-party as form of payment.

Criminals have several ways of claiming gift card balances. In fact, a 2022 AARP survey found that one in four respondents to the AARP survey said they had given or received a gift card that turned out to have no value on it. To combat these scams:

• Purchase cards you plan to use yourself or give as presents directly from the business that issued them, preferably by ordering them online. Cards on store racks can be tampered with.
• Carefully examine any card you are considering buying at a physical store for signs of tampering. It’s safer to buy from places that keep gift cards behind the counter or, if they’re sold on racks, in well-sealed packaging.
• Register your card with the retailer if that option is offered. This makes it easier to track and quickly report any issues.

Con artists have latched onto gift cards as a convenient form of payment in their scams. Here’s how it works:

• You’re directed to buy one or more gift cards — often referred to as “electronic vouchers” — as a quick means of making payment.
• You’re told to share the numbers on the back of the gift cards, by reading them off or sending a picture.
• The request comes from someone you wouldn’t expect to ask for money this way:

· A Social Security warning of a problem with your account
· A utility company warning of an imminent shutoff
· A lottery company promising a big prize — once you pay some fees upfront
· A grandchild needing bail or facing another financial emergency.

If you are confronted by someone directing you to buy gift cards to pay for some obligation, it is a scam — full stop. Disengage immediately and report it to the Federal Trade Commission at reportfraud.ftc.gov. The reports are used to identify trends and build cases against criminals.

If you have lost money to this act of fraud, report it to your local police and insist they take your report. It may help you recoup losses if the criminals are brought to justice down the road.

AARP has more resources to help at our Fraud Watch Network.