The Use of Gift Cards as a Scam Payment Method Has Increased Dramatically, FTC Data Shows
The Agency Says that in the First Nine Months of 2021, Americans Lost $148 M in Gift Card Scams, More than All of 2020.
According to the US Federal Trade Commission (FTC), customers across the country reported losing $148 million in scams where gift cards were used as a payment method. This amount is more than what was reported for the entire year of 2020.
Almost 40,000 Americans said they paid a scammer with a gift card during that time frame, with the majority of them indicating they paid scammers mimicking big organizations or government entities.
This type of scam payment has increased every year during the last three years, now reaching staggering numbers both in the number of reports and the total amount of losses.
Since 2018, both the numbers of consumers filing reports in which gift cards were the form of payment to scammers and the amount they have reported lost have increased steadily.
The FTC has resources for consumers, including information on how to contact gift card companies to try to stop payments to scammers at ftc.gov/giftcards.
Target Gift Cards, the Big Winner
One recent development mentioned in the Federal Trade Commission data spotlight is the advent of Target gift cards as the most popular option for scammers.
As explained by FTC, Target gift cards accounted for approximately $35 million in payments to scammers, more than twice the amount of any other brand of gift card.
The average amount lost when clients used Target gift cards to pay was $2,500, which was higher than any other brand of card, with almost a third reporting losses of $5,000 or more.
Most gift card scams start with a phone call from someone impersonating a branch of the government like the Social Security Administration, or a business.
The caller might threaten to freeze your bank account and tell you that you must buy gift cards to avoid arrest or to keep access to your money in your bank account.
When it comes to this type of scam, it is important to be aware of the fact that gift cards are supposed to be used to acquire gifts, not to make purchases.
Customers who paid a scammer with a gift card are advised to inform the company that issued the card as soon as possible.