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  • Jan 20, 2022

Tech Talk with Jeff - Gift Card Scam Payments

The use of gift cards as scam payments is on the rise. How to protect yourself.

Recently the FTC (Federal Trade Commission) released messaging on gift cards being used for payments in scams. The use of this method of extracting money from people has increased to an eye-opening level. The FTC is telling us that people lost money to scammers using gift cards to the tune of $148 million in just the first nine months of 2021. They indicated that this amount is greater than what occurred in 2020 for the whole year.

So how is it so many people are being scammed in this way?

The short of it is, a scammer contacts a victim with some form of a serious issue that must be handled immediately. Then the victim acts on the serious issue in fear and with urgency. The scammer requires the payments from the victim through gift cards. Very quickly the provided funds are gone and not retrievable. Later the victim realizes they have been scammed.

Why do people fall for this?

Keep in mind, scammers are good at what they do. They create a threat, fear and a heavy sense of urgency. This results in victims reacting before thinking through what is happening. The numbers bear it out. That is a lot of gift cards and a lot of money.

Here are a few examples:

The victim is contacted that the IRS is going to come and arrest them because they owe back taxes. If they pay right away the charges will be dropped. They then tell them to provide the payment using gift cards. The victim quickly gets the gift cards and provides the numbers off the cards. Poof! The money is gone in a flash with generally few ways of recovering it.

Another thread on this is, your phone rings and you answer it because the caller ID says it is your bank or credit union. They tell you there is a problem, like a large charge, with your account and that they need payment right away to correct the issue. And, by the way, the payment needs to be done using a gift card that will be put in a secure file once received. You panic and do not want a problem covering your bills. You rush to get a gift card and provide the numbers off the card to the person that called. Unfortunately, it was not your financial institution that called, and the financial institution has no knowledge of the event because they did not place the call. The financial institution is also a victim since it is their reputation that a scammer is using against one of their customers.

The scenarios can be different, but it usually involves fear that the victim is in trouble and needs to act immediately to ward off the threat.

In looking at these scenarios, there are several things to keep in mind:

  • No one is immune from these scams. Even people who deal with scams as part of their jobs get caught in scams, even though they know better.
  • When something is going on and you are asked to take action quickly, STOP and THINK. Is this really making sense? Calm down, think it through. Time is actually on your side, not theirs. Do not be rushed into making decisions and taking action.
  • Caller ID is a tool that is easily used against you. Just because the caller ID says it is your bank or credit union, doesn’t mean it is. Caller ID is easy to alter. So easy even I could do it. Absolute child’s play. Don’t ever trust your caller ID. It is a good example of a technology that was wonderful that has been turned against us.
  • Gift Cards are good for giving as gifts. They should generally never be used as a form of payment. If someone is putting pressure on you and telling you to pay by gift card, it is time to slow down and find out what is really going on. It is most likely a scam.
  • No viable proper business or government agency will ever ask you for payments using gift cards.  Period. Something is really wrong if they are.
  • Verify, verify, verify. Do not use any of the contact information provided to you by whomever contacted you. It will most likely lead right back into the scam. Go to the real web site for actual information or the back of your credit card if it is a credit card related issue and call those numbers. This includes never trusting the information provided in an email. Emails are so easily faked.
  • Most problems with accounts, payments, government issues (IRS) can be handled calmly and in a reasonable time frame. These things will never be rushed events. If they are rushed, something is wrong and usually it is because it is a scam.

Scammers don’t care about you and do not feel guilty about scamming you. They will pretend to be whomever they want to be to try to extract money from you. Using gift cards is a quick easy method for them that does not require direct interaction or traceability. Also, with the way technology is today, a scammer can be anywhere in the world. Including prison. Yes, those cases have occurred where a prisoner has a cell phone and they sit there scamming people.

The person most invested in protecting you is you. Pay attention, don’t be rushed into action. Fully understand and vet out any action you are instructed to take. Because, you are ultimately responsible for the actions you take and must protect yourself from the scammers.

Be aware and be safe!

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