Photo Courtesy of VISA
The FTC recently found that 26 percent of scam victims paid with a gift card between January and September 2018, compared to only 7 percent in 2015—a 270-percent increase.
By Forum Staff
Prompted by a sharp increase in reports of scam artists demanding payment from consumers in the form of gift cards, the State Attorney General’s Office has been working with three major retailers—Best Buy, Walmart, and Target—on reforms to their nationwide policies and practices to help protect consumers from being victimized by gift card fraud.
Gift card scams have rapidly increased in recent years, State Attorney General Barbara Underwood noted. The Federal Trade Commission recently found that 26 percent of scam victims paid with a gift card between January and September 2018, compared to only 7 percent in 2015—a 270-percent increase.
According to Underwood, the most common gift card scams are:
• Grandparent Scam: The scammer impersonates a grandchild of the victim who claims to be in some sort of trouble, typically related to a car accident or arrest, and in need of money to pay for bail or a lawyer. Victims report that the scheme was believable because the scammers knew the names and other information about their grandchild and sounded like their grandchild.
• IRS Scam: The scammer impersonates someone from the U.S. Internal Revenue Service attempting to collect taxes allegedly owed. The scammer usually threatens arrest that day if the debt is not paid immediately via gift cards. Again, the victims report that the scheme is believable because the scammers may give the name and badge number of a real IRS agent whose identity can be verified online, they may know detailed information about the victim’s tax history, or they may send the victim an email that appears to be from an IRS domain.
• Tech Support Scam: The scammer impersonates a tech support employee claiming to work for the manufacturer of the victim’s computer. The scammer claims there is a virus and requests remote access to the victim’s computer. After the scammer “fixes” a non-existent problem, he or she demands payment for the services and refuses to unlock the computer until the victim pays.
Crooks use the gift cards almost immediately, often to purchase third-party gift cards such as iTunes, Steam, or Google Play cards. This makes it very unlikely that a victim will be able to get any money back, Underwood noted. Once a consumer falls victim to the scheme, the scammer often continues to call the victim demanding more money in gift cards, resulting in large losses to consumers. For example, one New York resident reported losing $36,000 as the result of a grandparent scam.
Some of the changes that Walmart, Best Buy, and Target have recently implemented in partnership with the Attorney General’s initiative include: reducing the total amount that a consumer can purchase in one transaction in store-branded gift cards; reducing the dollar limit that can be loaded on a store-branded gift card; placing restrictions on the redemption of store-branded gift cards, including prohibiting the redemption of store-branded gift cards for other gift cards; and enhancing employee training to help employees identify the warning signs of gift card scams and warn potential victims when appropriate.