Gift card scams and how to avoid them

Read time: 3 minutes

Gift cards are great last-minute gifts or perfect for the person who already has everything.

Considering Americans spend roughly $200 billion on gift cards each year, it’s hard to argue their popularity.

Sadly, scammers take advantage of the widespread use of gift cards for their own gain.

In 2023, the Federal Trade Commission (FTC) reported Americans lost $217 million in gift card-related fraud. What’s even more surprising is how easy gift card fraud actually is.

Common gift card scams

There are two kinds of scams involving gift cards that are popular among scammers. Here’s how they work:

Digital gift card scams

Scammers will contact you with an urgent request to settle outstanding debts with a payment via gift card.

They’ll usually tell you what type of gift card to get and from what retailer. They’ll ask you for the code, and if you provide it, it’s a done deal.
Physical gift card scams

Scammers will tamper with physical cards in stores to get the gift card number.

They’ll call customer service with this information and see when the gift card has been purchased and activated, allowing them to drain the funds.

Why do scammers use gift cards?

The main draw to using gift cards for scams is very simple: Most people know how to buy and use them. On top of that, they’re quick, virtually untraceable, and easily convertible into cash or Bitcoin.

What to watch for in gift card scams

Knowing how common these scams are, it’s important to understand the common tactics scammers use. According to the FTC, here are a few ways scammers try to get you to buy gift cards:

They say they’re from the government. They’ll warn you about an outstanding balance in the form of taxes or fines and ask you to pay via gift card. Often, they’ll pose as the IRS, Social Security Administration or FTC.
They say they’re from tech support. Scammers will say there’s something wrong with your device, ask for remote access and request you pay them via gift card to get it fixed.
They say they’re a loved one with an emergency. They’ll ask you to send money through a gift card right away, but to avoid telling anyone. They may even use voice cloning technology to sound like your friends or family.
They say you won a prize. But before you can collect it, you need to pay fees or other charges with a gift card.
They say they’re from your utility company and threaten to cut off your service if you don’t pay them with a gift card immediately.
They ask for money after meeting you on a dating site. These so-called “romance scammers” will ask you to buy a gift card to send them money either as a gift or to help them out.
They send you a check for way more than you expected. They’ll ask you to deposit the check and just give them the difference on a gift card. When the check bounces, you’re out the cost you paid for the gift card.

Be skeptical about anyone asking for payments that you did not expect. One tool scammers use to keep you on your toes is urgency. Any legitimate biller won’t ask for instant payment, and on top of that, will very rarely ever ask for payment in gift cards.

If you think you have been targeted by a gift card scam, the FTC recommends you:

Report the gift card scam to the gift card company right away. No matter how long ago the scam happened, report it.
Ask for your money back. Some companies are helping stop gift card scams and might give your money back. It’s worth asking.
Tell the FTC at ReportFraud.ftc.gov. Every report makes a difference.

Curious about reported scams in your area? Explore this scam-tracking map from AARP to warn neighbors of potential scams and see if anyone has had a similar experience.