15 Ways to Avoid Gift card Fraud

February 24, 2010 | 1 Comment

Gift card sales for the holiday season were estimated to reach nearly $25 billion in 2009. More than 55-percent of American adults say they’d like to receive one, according to a National Retail Federation survey, making gift cards the most requested gift this year.

Naturally, scam artists have latched onto this trend and are pulling their usual dirty tricks. For example, the web site BBBCertifiedGifts.com uses a fraudulent copy of the Better Business Bureau seal but is not affiliated with that consumer-protection agency in any way. The site purportedly sells $1,000 gift cards to gas stations and grocery stores for only $149.95.

The site offers a 100-percent guarantee, yet a closer inspection reveals the guarantee seal was lifted from Schwan’s, an online grocery and delivery company. According to the BBB, the physical address listed on the site is a well known virtual office space from which many other scams have originated.

This offer contains many common indicators of a scam, yet you know some shoppers seeking great deals have bought into it. It’s a perfect example of caveat emptor or “Let the buyer beware.” Here are 15 ways to protect yourself from gift card fraud.

1. If it looks like too incredible a deal, it probably is: Consider how the above-detailed site could afford to sell $1,000 worth of product for $149.95. Why would a seller take such a loss?

2. Verify the merchant: If you’re not familiar with the merchant selling a gift card, verify it is a valid business. Call the phone number listed on the site and ask detailed questions about their policies. You also can check with the BBB or visit Snopes.com for verification.

3. Don’t trust all positive feedback for eBay sellers: Purchasing from an eBay seller with positive feedback isn’t necessarily a fail safe. It can take a credit-card owner several days to realize his card has been stolen and report it. In the meantime, other gift card buyers may have left positive feedback for the fraudulent eBay seller. A seller also can build a strong feedback history by having other fraudulent sellers buy $0.01 items and register positive feedback. This is a very quick and inexpensive way for them to build up credibility. In some instances, the buyer and seller are the same person.

4. Watch for hacked accounts: Online auction accounts can be hacked and stolen. You can identify hacked accounts because feedback hasn’t been left for months or years and suddenly start receiving tons of feedback solely for gift card sales. Hackers target inactive accounts so the actual account owner won’t notice the hack.

5. Get the physical card: Fraudulent auction sellers will simply e-mail you the gift card code to enter at an online merchant’s site. This speeds up the process before the con can be discovered. Make sure the seller mails you the actual card.

6. Read eBay’s guide: The largest online-auction site has compiled an excellent guide to help buyers avoid auction fraud. It’s well worth investing the time to read the full guide before you begin bidding. Many of these tips apply to other auction sites.

7. Don’t buy from e-mails: Fraudulent e-mails offering free gift cards appear like locusts during the holidays. Many ask for personal information the thieves can use to harvest other information about you and, ultimately, target your bank account. The easiest way to filter out the bad from the good is to use anti-virus software. This eliminates a lot of spam. Secondly, watch out for e-mails riddled with misspellings and suspicious-looking 1-800 numbers you must call to redeem prizes. Thirdly, don’t click on any links within such emails. If you’re unsure, cut and paste the URL into a new browser.

8. Don’t buy gift cards off publicly displayed racks in retail stores: Thieves troll gift card racks and copy the identifying information on cards. Later, they call the 1-800 number on the back of the card to verify the balance and learn if the card has been activated. If so, they begin shopping online using the ID information they stole.

9. Examine the front and back of gift cards: If the PIN numbers have been scratched off, inform the store. If a gift card looks like it could have been tampered with, don’t buy that gift card.

10. Check the balance: Many cards include a toll-free number on the back and others provide a web site where you can register your card. You can call or log-in to check the balance or to report lost or stolen cards and gift card scams. Be sure to keep your receipt and, if you believe you’ve been taken by a gift card scam, report the loss as soon as possible by calling or visiting the merchant’s web site.

11. Check the seller’s country of origin: A sure tip-off of fraud is when a gift card offer originates outside the country, particularly for online auctions. Many such sites are limited to U.S. residents, but there are ways to circumvent this limit.

12. Have the cashier scan gift cards in front of you: This will ensure your card is valid and reflects the balance for which you paid. It’ll also protect you from crooks who exchange worthless cards for the cards you think you’re buying.

13. Keep your receipt: Hold onto this proof of purchase until you’ve depleted the entire balance. Many merchants can track where the gift card was purchased, activated and used and some will replace a stolen card, if you have your receipt.

14. Register your card at the store’s web site: Although not all stores offer this option, you can uncover mis-use of your gift card sooner and report it more quickly.

15. Never provide personal data: Don’t give away your Social Security Number, date of birth or any other personal information when you purchase a gift card. No reputable company will ask for this info.