Gift Card Scams Are Growing, And We're All Paying The Price

Every year, scammers trick Americans into handing over millions of dollars in gift card payments. Retailers aren't doing much about it.

money dollar fire burning

The scams start out innocently enough.

Maybe a phone call from someone who says he works for Amazon, claiming he noticed someone hacked into your account. Maybe someone who says she works for Microsoft, offering a refund for a computer security service you bought a few years ago that stopped working.

Lisa Hernandez was trying to reach, the dating site, to cancel her account when it happened to her. The 50-year-old single mother of four had signed up for the service but decided she didn't want to stay with it.

She searched on Google for a customer service number to call. What she found instead was a fake website, built to look legitimate but with a phone number that connected her to a scammer posing as Match customer service. Kevin, the man on the other end of the line, said he could help. First, though, he told her she needed to install a program called TeamViewer, which allowed him remote control of her computer.

He then directed Hernandez to log into her bank's website. "We're going to directly refund you your money," he promised and asked her to fill out a computer-generated form for her refund of $93. Instead, Kevin set his scam in motion by manipulating the code on her computer to make it look like he had deposited $9,000 into her bank account instead, effectively doubling her savings.

Sometimes the scammers pretend to be tech support, calling to repair your printer. Or they say your internet is hacked and then get you to install screen-sharing software like TeamViewer or AnyDesk to show technical gobbledygook that they say is proof the hackers have taken over. You just need to buy security, they say, with gift cards.

"Scammers know if they make it emotional and create this sense of urgency and fear, the logical part of your brain disconnects and the fight-or-flight kicks in -- which is great for protecting you, but it's terrible at making decisions," said Eva Velasquez, head of the nonprofit Identity Theft Resource Center, and a former law enforcement investigator of economic and financial crimes.

Her team's research found that if you can interrupt that emotional response, the logical side has a chance to kick in. That's partly why retailers have put signs up at gift card racks, warning about potential fraud. "Have you been asked to buy gift cards to pay a fine, taxes, fees or to help someone?" one sign at a Giant grocery store in Maryland reads. "Never provide numbers to ANYONE over the phone or by email."

Still, Velasquez said, scams of all sorts have become even more prevalent during the pandemic. "It's been growing and growing, and the explosion over the last 18 months is unprecedented," she said. "It's going to take at least a decade to unwind and get to the bottom of how big a problem it is."

picture of a phone with a locker wallpaper representing protection from gift card scam fraud

Read more: Don't fall for these clever Black Friday scams this year

Trust betrayed

One of the first things Mark told me when recounting his experience being scammed was how bad it made him feel. It had only happened a few weeks earlier, in October, and it still stung. He requested his full name be withheld to avoid embarrassment with his family.

The call from the scammers started out seemingly normal. The person calling claimed to be from Amazon, concerned about a rogue $750 purchase with his credit card.

The person on the other end of the phone claimed Amazon had already stopped the supposed charge but asked Mark to buy gift cards that they could use as bait to track down scammers. Once all the scammers were caught, Mark was told, they'd give the gift cards back.

"Dumb me, I believed that," he said.
Mark is in his 70s and retired after a successful career as crew for some of the most memorable summer blockbuster films from the 1990s. But he says he's not computer savvy. "I have trouble getting along on it," he said. "I mostly use it to play puzzles and stuff."

At first, the scammers asked Mark to buy $3,000 in gift cards from Target and Apple. If a store employee asked why he was spending so much money, the scammers told him to say the cards were gifts for a party.

Retailers have a blind spot for situations like Mark's. The companies have sophisticated software and entire teams devoted to detecting customers who are trying to scam them. But when a customer comes in, buying gift cards, "the retailers are learning it's very difficult to track," said David Fletcher, senior vice president at ClearSale, which helps detect fraud at the online stores of more than 4,000 merchants, including Motorola, Under Armour and Bath & Body Works.

That's why some retailers train employees to ask probing questions at checkout. Best Buy, in a statement, said it's also added warning signs to gift card displays and checkout counters. Its systems flash a warning on the credit card reader screen when customers purchase gift cards above a certain limit.

But it still isn't enough. Fletcher himself became a victim when scammers emptied a $100 gift card his mother had bought for the fishing store Bass Pro Shops. He suspects scammers took photos of the account codes on the back of cards while they were still on the rack and waited until they were activated.

"Gift cards are so hard to trace back to fraudsters," he said.

Not that any of the questions the clerk asked Mark made any difference.

Read more: Cryptocurrency scams are all over social media. Don't get duped

At his first stop, the teller would only let him buy a couple cards, at $500 each. "It was kind of a surprise," he said of the limit. In retrospect, he appreciates it now.

But the scammers convinced Mark to go to more stores. Mark remembers checkout clerks asking what the cards were for a couple times. The scammers kept asking Mark for more money until he became suspicious and checked the value on the Target cards he had purchased. That's when he learned most of the money was gone.

When Mark contacted the police, they took down his information but didn't ask for the phone numbers the scammers called from. Experts say it's nearly impossible to track fraudsters through their numbers anyway. Instead, the police suggested Mark contact AARP for support and also to help guide him through reporting and other things to do. His bank, from which he'd ultimately withdrawn $5,000, declined to refund his losses.

"I feel so stupid about the whole thing," he said.

Like Hernandez, the nurse, Mark hopes that sharing his story will help people learn some of the tricks the scammers use and avoid the same mistakes he made. 

While Mark said his savings are enough to cover the losses he suffered, the fraudsters made off with nearly all of Hernandez's money. And she gave up getting a refund from Match too.

"It's tough and embarrassing, and I feel kind of dumb," Hernandez said, adding that she tends to keep the tough things that happen in her life to herself, though eventually she did tell some details to her kids. "I had to go and pray a lot."

She also decided she's going to stay away from dating for now. But she did have one last confrontation with Kevin, who promised to make it better. 

Hernandez was desperate to get her money back, but she was also upset. "I don't know how you can do this to people," she remembers saying. Kevin asked for her address and ended the conversation saying he'd send her the money in the mail. She hoped his conscience might have changed him.

She hasn't heard from Kevin since.

Read more: Scammers are destroying lives, one gift card fraud at a time. Here's who's fighting back


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