BBB: Gift card scam reports rose 50% in 2023

Christy Russell,
credit cards (Source: BBB)
Fraud reports to BBB Scam Tracker involving gift cards as a form of payment spiked in the first three quarters of 2023. (Source: BBB)

(KBSI) – The Better Business Bureau warns consumers of gift card scams after reports they rose 50% in 2023.

Today’s scammers want gift cards as payment, leaving those unaware of this tactic vulnerable to schemes designed to commit fraud.

Better Business Bureau (BBB) research shows fraud reports to BBB Scam Tracker involving gift cards as a form of payment spiked in the first three quarters of 2023. That is and increase of 50% from the same period the year before.

Since scammers have doubled down on gift cards as a method to steal money from consumers – especially online shoppers, retailers are implementing new fraud prevention solutions in response.

A new BBB study finds:

  • Technology, like algorithms meant to detect fraudulent behavior, helps retailers stop scammers in their tracks and sometimes return money to customers.
  • Fraudsters leverage international networks to convince consumers to hand over gift cards.
  • Advance fee loans, government impersonation, phishing and lottery/sweepstakes top the list of scam types used most often to obtain gift cards.
  • Scammers frequently seek gift cards from big-box, technology and online stores.

Gift card payment scams reported to BBB, Federal Trade Commission (FTC) and Canadian Anti-Fraud Centre (CAFC) since 2020:

  • 3,918 BBB Scam Tracker reports
  • 177,074 reports to the Federal Trade Commission’s Consumer Sentinel Network with $690 million in losses
  • 9,259 reports to the Canadian Anti-Fraud Centre with losses totaling 15.6 million Canadian dollars

One St. Louis consumer lost $2,900 to scammers while shopping for a puppy for his son. He found a legitimate-looking seller online. The seller first asked him to pay by Zelle or Paypal, and then requested pre-paid debit cards instead. The person paid $2,900 in shipping and fees before realizing it was a scam.

Another St. Louis consumer lost $1,700 while shopping for a macaw. She contacted an online seller who asked for payment in pre-paid gift cards. The seller kept asking for money and claimed there were issues with shipping. The woman paid $1,700 before cutting off contact. At one point, the scammers opened a Venmo account in her name, and they continued trying to reach out to her.

In 2021, BBB’s International Investigations Initiative examined gift card payment scams in an in-depth study.

Retailers identified several methods to protect consumers, but warn that it is impossible to stop all scams as fraudsters continue to find ways around safeguards.

BBB tips to spot a gift card scam:

  • Be wary of anyone asking for payment with a gift card, including “government” agencies. No legitimate government organization will ask you to pay with a gift card.
  • If you suspect a scam, contact the gift card seller, the actual business or government organization supposedly asking for money, and BBB to ask if you are dealing with a scammer. To find contact information, go directly to the organization’s website rather than search for their customer service number, which can be spoofed by scammers.
  • Keep all information related to your purchase if you are scammed, because some retailers may require that information for refunds.
  • If you suspect fraud, act immediately, contact the gift card seller or the number on the back of the card to report it.
  • Follow advice and report suspected scams to BBB Scam Tracker, the Federal Trade Commission and the Canadian Anti-Fraud Centre.

Visit BBB.org to check out a business or register a complaint, BBB Scam TrackerSM to report a scam and bbb.org/scamstudies for more on this and other scams.

Categories: News, Scams

Related