Unpaid Debt And Tax Scams
You receive an unsolicited email or phone call to make a payment for taxes, fines, bail money, utility bills, or other unexpected fees. The scammer may claim you owe a past due amount because of miscalculation of your taxes. They may claim that you’re owed a tax refund, prize, or rebate, but must first make a payment for administrative fees with a gift card.
If you receive a call from someone claiming to be from the IRS and asking for money, never give out personal information. Report the call to the IRS using their “IRS Impersonation Scam Reporting” web page or by calling the IRS at 800-366-4484.
Why Do Scammers Always Ask For Gift Cards
Fraudsters often ask their victims for payment via gift cardsbut why? Why don’t they simply ask for money instead?
Have you ever noticed that some scammers want their victims to send over a gift card instead of cold, hard cash? It may seem like an odd choice at first, but asking for a gift card is in the best interests of a scammer who wants to get people’s money safely and discreetly.
Here’s why hackers are so obsessed with gift cardsand why it’s a dead giveaway that they’re trying to scam you.
How Do Scammers Cash Out Gift Cards
Once scammers get the numbers from victims gift cards, how do they actually get the money? Gift cards are generally limited to use in the country where they are purchased, though some cards bought in Canada can be used in the U.S. and some reloadable cards may be used outside the country. Scammers have several different ways to get the money.
- They can use the numbers on the back of the cards to buy physical goods. Because open and closed loop gift cards can only be used in the country where they are purchased, this means that scammers will often use money mules — people who transfer illegally acquired money or goods — to go to stores and buy things like phones or electronic goods that they can then resell at online sites such as eBay or Craigslist.
- Scammers can use gift cards to buy goods sold online at places such as eBay or Amazon and have them shipped to money mules to be resold at online markets or reshipped out of the country.
- Some cards can be used at ATMs. If they are, scammers can simply withdraw cash.
- The numbers from the cards can be resold either at sites like Craigslist, eBay, or a variety of other online marketplaces. There are reports that the two most prominent online marketplaces for gift cards were Raise and Cardpool. Cardpool states, however, that it is no longer accepting gift cards. However, there are a variety of others, including gift card granny, com, giftcardspread.com, cardbear.com, retailmenot.com, cardkangaroo.com and many others.
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Scammers Demand Gift Cards
Gift cards are a great way to give a gift. But did you know they are also a scammers favorite way to steal money? According to the FTCs new Data Spotlight, more scammers are demanding payment with a gift card than ever before a whopping 270 percent increase since 2015.
Gift cards are for gifts, not for payments. If someone calls with urgent news or a convincing story and then pressures you to pay them by buying a gift card, like an iTunes or Google Play card, and then giving them the codes on the back of the card stop. Its a scam.
Gift cards are the number one payment method that imposters demand. They might pose as IRS officials and say youre in trouble for not paying taxes or a family member with an emergency or a public utility company threatening to shut off your water or even a servicemember selling something before deployment. Or they might call with great news youve won a contest or a prize! But to get it, you need to pay fees with a gift card. Scammers will say anything to get your money. And they know how to play into your fears, hopes, or sympathies. They like gift cards because, once theyve got the code on the back, the money is gone and almost impossible to trace. But knowing how these scams work can help you avoid them, and you can help even more by passing on the information to people you know.
How Big Is The Gift Card Payment Scam Problem
BBBs Scam Tracker system shows a substantial increase in losses involving payments with gift cards over the last several years. Reported losses nearly tripled between 2017 and 2020. The median loss was $700 in 2020.
Year BBB Scam Tracker Reports Losses
2017 647 $1,179,563
According to a December 2020 analysis by the Federal Trade Commission , About one in four who lost money to a fraud say they paid with a gift card. In fact, gift cards have topped the list of reported fraud payment methods every year since 2018. During that time, people reported losing a total of nearly $245 million, with a median individual loss of $840.
The FTCs statistics exclude reports categorized as online shopping scams and come from consumer complaints directly to the FTC. They do not include any third-party data contributors such as BBB or state Attorneys General.
The Canadian Anti-Fraud Centre has seen gift card payment scam complaints double since 2017.
Year CAFC Complaints Losses reported
2017 1,222 $2,302,769
For those who reported their gender, Scam Tracker data shows that two-thirds were women, though there is no evidence that scammers concentrate efforts on women.
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What Is A Gift Card Scam
Gift card scams dont happen that often, but those that do are easy to spot and avoid! Compared to credit card fraud and other forms of identity theft, gift card theft is actually quite small and the damage done is generally limited to the value of a gift card. But it doesnt matter if fraud is prevalent or not when you are the one with a gift card that does not work. So lets look at the various gift card fraud schemes that can happen and identify warning signs that something could be amiss. Though scammers can be tricky and pretty persuasive, you generally should be able to avoid gift card scams by following the tips below.
Send secure eGift Cards via email.
As A Victim Of An Itunes Gift Card Scam What Recourse Do You Have
Let me state from the get-go, Apple will not refund your money. If you buy an iTunes gift card and give that gift card away for any reason, Apple will not refund you . . . and I dont blame them. I would not refund the value of the gift card either. If I may, let me explain by offering a personal story from experience.
If you fall prey to such a scam, dont go to Apple. Go to the Police.
About 20 years ago, a homeless man who walked with a heavy limp, held a sign outside of a local shopping mall that read, Will work for food to feed family.
Out of compassion, we give this homeless man $50 worth of groceries to feed his family, and I even told him to meet me at that same spot the next day, and I would help him find a job.
Not only did he not show up, but when I flagged down the patrolling mall security vehicle to inquire of the homeless man, the police told me that hes a known con-artist and does that for a living, fake limp and all.
Clearly I was the victim here and was conned. I fell for the scam.
Do I now have the right to go to the grocery store and demand that they refund me for the $50 that I spent on groceries for the homeless man? Of course not. Neither does Apple have any obligation to refund victims who fall prey to con-artists who convince them to purchase iTunes gift cards for them.
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What Does A Scammer Do Once They Are In Possession Of The Serial Numbers
Once in possession of the card serial numbers, the victim is surplus to requirements. They may be told to expect a call back once payment has been processed. This call will never come though unless the scammer wants to extort more money as the victim is now seen as a soft target.
The scammer now has a few options. The least likely is that they enter the code into the App Store, Google Play Store, Amazon account, etc and use the store credit in the way it was intended. That would be a lot of hard work for very little reward. The most popular option would be to sell the code in an online marketplace such as CraigsList or Ebay. It is not uncommon for discount gift cards to be sold on platforms such as these. The scammer would be able to go about their business without anyone batting an eyelid.
Scam Alert: Google Play Gift Cards
If theres a will theres a way when it comes to scammers, especially with gift cards. Everyone loves gift cards. Consumers love how easy it is to purchase gift cards, use gift cards and even give gift cards. Its as simple as buying a card at a brick and mortar store or clicking a few buttons and almost instantly having the funds needed to play. Scammers love gift cards too. Gift cards can immediately be activated and spent by these scammers even before the owner of the card knows what happened.
gift cards are targets right now. Scammers love how easy they are to steal so consumers need to stay one step ahead of these online crooks. Heres one of the latest Google Play Gift Card Scam that is scouring the internet.
Scam Alert: Currently there is an email scam occurring where thieves, posing as someone the recipient knows and are phishing for personal, financial, and other private information. This includes requests for Google Play Gift Cards. For example, the message will read, I need you to pick up a couple of gift cards. Can you make this happen? The type of gift card I need is Google Play gift cards. I need 4 cards in $500 denominationsscratch the back of the card to reveal the card codes and email me the gift card codes.
Take away: Never provide any personal information including gift card codes like Google Play in an email. What seems like the information is going to a trusted source, it could be a scam.
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How Many Scammers Ask For Gift Cards As Payment
The FTC recently did an in-depth examination of loss reports to show which scams were most likely to demand payment with a gift card. Here are their results:
48% of Government Impostor Scams
In this scam, callers impersonate the Internal Revenue Service, the Social Security Administration, or U.S. Immigration and Customs Enforcement . They claim that the consumer has done something illegal, and must either pay a fine with a gift card or move their money temporarily to a safe account by purchasing gift cards. This type of fraud is detailed in the BBB study on government impostor scams.
44% of Family/Friend Impostor Scams
Emergency scams typically take one of two forms. In one form, victims receive calls supposedly from grandchildren in urgent need of money. The other form involves an email or text from a friend who is supposedly stranded abroad or in trouble, and who needs a short-term loan to help them out.
35% of Business Impostor Scams
Often this involves emails or text messages from the boss asking an employee to buy gift cards for a seemingly benign purpose . This type of fraud is discussed in the BBB study on business email compromise frauds.
33% of Tech Support Scams
Scammers use popups, robocalls, or other means to convince victims that their computers have serious problems. The scammers get into victim computers remotely, find nonexistent problems, and offer to fix them for a fee. Read BBB’s study on tech support scams.
25% of Romance Scams
Scam : The Fake Prize
You might get a call, email, or text message from a scammer claiming to be with a lottery or contest. This scammer says youve won a trip, new car, or cash prize. But to claim the prize, you must first pay a redemption or claiming fee with a gift card. The scammer asks you to purchase a specific gift card, call back, and read the cards number and PIN over the phone.
This, of course, is another scam. No legitimate lottery, sweepstakes, or business will ask you to pay a fee to claim your prize. And youll never win a prize from a sweepstakes or lottery you didnt enter in the first place.
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Safely Buying And Using Gift Cards
Remember that gift cards are for gifts, not for payments. So if you buy gift cards to give away or donate:
- Stick to stores you know and trust. Avoid buying from online auction sites because the cards may be fake or stolen.
- Check it out before you buy it. Make sure the protective stickers are on the card and that they do not appear to have been tampered with. Also check that the PIN number on the back isnt showing. Get a different card if you spot a problem.
- Keep your receipt. This, or the cards ID number, will help you file a report if you lose the gift card.
How To Spot A Gift Card Scam
Gift cards make it really easy for a scammer to harvest people’s funds. However, it’s a huge red flag too.
The truth is, no company or person will ask for payment for something in gift cards. The IRS is not interested in $100 gift card vouchers for Amazon, and neither is Microsoft. If these or any other companies demand financial payment, it will be through a money transfer and not a gift card.
As such, if a stranger claims to be from a specific organization and asks for payment in gift cards, do not pay them.
The reason they’re asking for a gift card is that they’re scamming you, and they don’t want to leave a paper trail. There are no situations where you can pay a fine, fee, or any business transaction through gift cards.
Sometimes, a scammer may even impersonate a friend or family member to trick you into sending over a gift card.
If you get a call supposedly from a desperate-sounding relative who needs a gift card to solve a specific problem, hang up immediately and contact the person yourself to see if it’s really them. A scammer will try their best to stop you from hanging up, so don’t listen to them.
Similarly, there are cases where a scammer will give you a large sum of money, then ask you to pay some back in gift cards.
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About Gift Card Scams
Be aware of scams involving Apple Gift Cards, App Store & iTunes Gift Cards, and Apple Store Gift Cards.
If you believe you’re the victim of a scam involving Apple Gift Cards, App Store & iTunes Gift Cards, or Apple Store Gift Cards, you can call Apple at 800-275-2273 and say “gift cards” when prompted.
A string of scams are taking place asking people to make payments over the phone for things such as taxes, hospital bills, bail money, debt collection, and utility bills. The scams are committed using many methods, including gift cards. As the fraudsters are sometimes requesting codes from Apple Gift Cards, App Store & iTunes Gift Cards, or Apple Store Gift Cards, we want to make sure our customers are aware of these scams.
Regardless of the reason for payment, the scam follows a certain formula: The victim receives a call instilling panic and urgency to make a payment by purchasing Apple Gift Cards, App Store & iTunes Gift Cards, or Apple Store Gift Cards from the nearest retailer . After the cards have been purchased, the victim is asked to pay by sharing the code on the back of the card with the caller over the phone.
Never provide the numbers on the back of a Gift Card to someone you do not know. Once those numbers are provided to the scammers, the funds on the card will likely be spent before you are able to contact Apple or law enforcement.
Is It Legal To Get Payments Through Gift Cards
It is specifically illegal to seek payment with a reloadable card in a telemarketing transaction. The FTCs Telemarketing Sales Rule forbids several payment methods in telemarketing transactions in the U.S., including wire transfers , remotely created checks and prohibit use of reloadable cards . Anyone requesting payment through these methods is violating the law. Canada does not have a similar law, although they are allowed to prosecute those who engage in fraud.
Scammers may not be deterred by the TSR since they are responsible for the fraud no matter how they obtain the money but it does provide a clear line so the public knows that anyone asking for payment by these methods is acting illegally and should not be trusted. Even if victims may not know how the scam works, it is important for them to know that anyone who seeks or obtains funds through these prohibited payment methods is violating the law.
In addition, anyone assisting or facilitating telemarketing fraud can be liable for violating the TSR. The FTC has used this assisting and facilitating authority to take legal action against both Western Union and MoneyGram, asserting that they provided substantial assistance while knowing or consciously avoiding knowing that they were aiding a scam.
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