Gift Card Online Scam: Who Are You Paying?

Have you ever received a voicemail or text message from the Internal Revenue Service (IRS) informing you that you owe taxes and  the only way to pay them is to give the agency an electronic gift card?

Perhaps a state trooper contacts you to inform you that you owe hundreds of dollars in speeding tickets and the only way to have them removed from your record is to call in the numbers from an Amazon gift card to pay your fines.

Ignore such calls, emails, or texts if you get them. They're both forms of gift card fraud, in which crooks dupe victims into giving them online gift cards or having them recite the numbers on the back of a gift card over the phone.

Fortunately, recognizing and avoiding various sorts of gift card frauds isn't difficult. Here are some of the most frequent gift card scammers, as well as the actions you can take to prevent being a victim.

HOW GIFT CARD FRAUDS WORK?

The perpetrators of these scams use high-pressure methods to get victims to hand up gift cards.

According to the Federal Trade Commission, fraudsters will generally phone, text, or email victims to inform them that they are in financial difficulty. They may say that the victims haven't paid their taxes, are behind on their mortgage payments, owe hundreds of dollars in traffic fines, or have missed utility payments. If the victims do not pay up, the scammers threaten to foreclose on their houses, put them to jail, or turn off their electricity.

COMMON TYPES OF GIFT CARD SCAM:

With these seven frequent gift card scams, scam artists may try to deceive you through the phone, text, or email. Here's how to recognize and prevent frauds.

Type 1: Threatened by the (FAKE) IRS

Someone will contact you or send you a text or email message claiming to be from the IRS in one of the most prevalent gift card scams. If you don't pay now, the IRS will arrest you, says this con artist. The criminal tells you that you must pay your taxes using a gift card, according to the criminal.

Scammers generally ask you to purchase gift cards from a certain shop, after which you contact them back and provide them your gift card information. This information is then used by the fraudster to purchase things online using the gift cards you have purchased.

What is the giveaway? You will never be contacted, texted or emailed by the Internal Revenue Service about unpaid taxes. If you receive a letter from the IRS, it will provide a phone number for you to contact.

As a second point, the IRS will never threaten to put you in jail for unpaid taxes you owe.

Last but not least, the IRS would never ask you to pay your taxes with a gift card.

Type 2: BEWARE OF GiftGhostBot

Unwitting users' gift card balances are regularly drained by bots, which are software applications that conduct automated activities online.

Retailers' online gift card balance check systems might be compromised by scammers using a bot called GiftGhostBot. There are gift cards in this system that have been redeemed by the bot. The crooks use the gift card number to make purchases themselves or sell it on the dark web when it is found by the bot. In order to use your card, you must first check to see if the amount has been exhausted.

Way to stop the BOT? Give bots less time to find your card information by using gift cards as soon as you receive them.

Type 3: THE TRICKY CASHIER

Occasionally, a store's cashier is complicit in the fraud. For example, let's say you buy a department store gift card as a gift for someone. When a cashier activates a gift card, he or she may not return the card to you, but instead replace it with another that has not been activated. Afterward, the cashier keeps the active card and offers you a non-working card in exchange. The cashier can then make transactions using the active card that you purchased.

What is the best method to prevent falling victim to this fraud? Keep an eye on the cashiers while they process your payment. As soon as the card is activated, have them return the gift cards to you.

Type 4: GET THE NUMBER FROM CARD

With a magstripe reader, thieves steal gift cards from retailers such as Walmart and Target. He scans the gift cards with a card reader and stores hundreds of card numbers on his computer hard drive. The fraudster then puts the gift cards back on display and leaves.

He then dials the customer support lines on the cards and inputs the gift card numbers he has copied. If the card has been purchased and activated, the fraudster will know how much money is remaining on it. After then, the fraudster can use the gift card number to make online transactions, therefore emptying the balance of a card that you purchased.

To avoid this scam: Gift cards should not be purchased from racks that are visible to the public at retail establishments.

Type 5: ONLINE AUCTION

There is a chance that you will be enticed to purchase gift cards from online auction sites. Don’t. Often, gift cards that have not been activated at these sites are sold by scammers. Paying less than the card's face value, you believe you're getting a deal, only to find that the gift card doesn't work.

The value of the gift cards they are selling online is also inflated by fraudsters. A $50 gift card, they may say. Once you've paid for and received the card, you discover that it's only got $5 remaining in it.

This fraud is easy to avoid: Gift cards should never be purchased from an online auction site, since they are not guaranteed to be valid. If you do decide to purchase gift cards online, make sure you do it directly from the merchant.

Type 6: PRICE FOR PRIZE

Scammers may contact you through phone, email, or text message, claiming to be associated with a lottery or contest. He claims you've won a trip, a brand new automobile, or some kind of money. Prior to redeeming your gift card as payment for the prize, you must first pay the redemption or claim fee with your card. They ask you to purchase a certain gift card, then ring back and read the card's number and PIN over the phone, according to the fraudster.

Unquestionably, this is a fraud. The winner of a reputable lottery, sweepstakes, or business will never be asked for a charge in order to collect their award. Never enter a contest or lottery you don't intend to enter.

Type 7: HI, THIS IS FROM YOUR POWER COMPANY

You're confident that you've paid your monthly utility bills on time. A representative from your public utility phones you one day and claims that you owe money, but you don't recognize the caller. Power or water will be cut off if you don't pay up right away. "Representative" of the utility company urges you to acquire a gift card in order to pay.

Scamming at its finest! It's not from the utility and the individual phoning will take your gift card information to go on a shopping spree, not the utility. It is quite unlikely that your public utility would contact you to let you know that you owe money. Instead, it will mail a letter.

Your utility won't threaten to shut off your electricity or water without giving you plenty of notice and opportunity to pay back what you owe, as well.

Also, gift cards are not accepted for payment by utilities.

If you ever face these types of scam, please instantly notify law enforcement. What if you are not aware of these scams and already provided the card number? Take help from law enforcement. 

Sometimes, you don’t have enough proof to show the scam. Reach out to a private cybersecurity specialist, gather the proof and have the culprit behind the bar.