The Gift Card Grift

By Catherine Taylor

AARP’s mission is to empower people to choose how we live as we age. Financial security, including fraud prevention, is essential to that empowerment. Fraud is everywhere, but one of the fastest-growing scams involves gift cards.

A recent AARP survey found that more than a third of U.S. adults have been asked by a scammer to pay a fake fee, debt, or other financial obligation with a gift card. About a quarter of those targeted took the bait, bought gift cards and shared the numbers with the crooks, losing an average of $200.

Unfortunately, older Americans are the most frequent victims.

“Criminals are most likely to convince people to purchase gift cards to ‘pay fees’ to claim sweepstakes winnings or ‘pay upfront’ for some product or service,” says Kathy Stokes, director of fraud prevention programs at AARP. “Or they impersonate a friend or coworker to coerce their targets to do them a favor by purchasing gift cards.”

If you read no farther, take note: “Gift card” is a Big Red Flag when it comes to recognizing and avoiding an online or telephone scam.

The sweepstakes scenario, AARP warns, was the most common tactic in gift card payment scams, as reported by survey respondents. Next most prevalent was being asked to pay in advance for a service or product, help a friend or colleague in need, or pay someone’s phone or utility bill.

Con artists posing in scam calls as tech support experts or government agents might also demand urgent payment to supposedly fix a computer problem, satisfy a tax bill or clear up a bogus issue with your Social Security number.

No matter what the pitch, anyone asking you to pay them with a gift card is a scammer, according to the Federal Trade Commission (FTC).

Awareness is critical and Rhode Island is trying to do something about that.

AARP Rhode Island supports state legislation that would require Rhode Island retail establishments that sell gift cards to display a conspicuous notice at or near where the gift card is displayed that cautions the purchaser about prepaid card scams and provides information on how to report a suspected scam. We also support requiring retailers who sell gift cards to train employees on how to identify scam activity and what to do should they suspect a customer is a victim.

"We have seen an uptick in scam calls, especially ones targeted towards seniors,” says bill sponsor, Sen. Victoria Gu (D-Westerly, Charlestown, South Kingstown). “This common-sense legislation will help alert people to a possible scam before they go through with the purchase of a gift card and lose their hard-earned money."

AARP advocacy volunteers will testify on Smith Hill when the bill is heard in committee, sharing their encounters with gift card grifters. Will legislation end gift card scams? No. But it could make a significant difference.

A survey conducted by the AARP Fraud Watch Network, in collaboration with the University of Chicago-based AmeriSpeak Omnibus survey, found about 1 in 4 consumers who purchased gift cards to pay a supposed financial obligation were warned by a store employee that it might be a scam. Previous AARP research found that more than half of potential scam victims avoid losses when a third party intervenes.

I’ve said it here before and I will say it again. If you can spot a scam you stop a scam.