Today’s episode of Scambook TV is all about gift card fraud. In 2011, gift cards made up 18% of all seasonal holiday purchases. Fraudsters are always keeping an eye on consumer trends, which means gift cards have become the focal point of a variety of scams. Kevan explains the top 3 gift card fraud schemes that you need to watch out for during holiday season 2012. The top 3 threats are smishing (text message spam like, thieves who steal activation codes, and con artists peddling gift cards on marketplace sites like eBay and Craigslist. To avoid getting ripped off by gift card fraud, Kevan advises us to only buy gift card from an authorized retailer, never buy cards that look like they’ve been tampered with, and always get a receipt.

Gift cards are a fast, easy option for that hard-to-shop-for person on your holiday list. These days, they’re available for just about every store or restaurant you can imagine: Target, Amazon, Best Buy, Walmart, Home Depot, the iTunes Store, Starbucks, McDonalds, Olive Garden, Red Lobster, Outback Steakhouse.

Many grocery stores and drug stores sell a wide variety of gift cards in one convenient location. That might be one of the reasons why gift card sales made up 18% of last year’s holiday purchases.

Unfortunately, the rise in gift card demand means we’re also seeing a rise in gift card fraud. Scammers pay close attention to consumer trends and use those trends to exploit victims.

Here are 3 Gift Card Scams to avoid this holiday season:


Threat #1: Smishing

Smishing (from “SMS” and “phishing”) is an attempt by scammers to get your personal information via text message. It can result in a flood of spam and telemarketing, mysterious charges on your cell phone bill, or even identity theft.

There’s many types of smishing, but the season’s most widespread smishing campaigns have used gift cards to lure victims. As many as 350,000 people may have received a text from, which tells them they’ve won a $1000 Target gift card.

If you try to redeem this “free” prize, you’ll find that you have to complete a series of special offers and surveys, giving them access to sensitive personal information. They may sell this information to marketers and identity thieves, or install malware like keyloggers to hack your computer. Read more about the scam here.

These false gift card offers use brands you trust, like Target, Best Buy and Walmart, but the actual retailers have nothing to do with the scheme. Don’t be fooled by the Target or Best Buy logo. If you receive one of these text messages, don’t go to the website and don’t even reply. Just delete the text.


Threat #2: Activation Code Thieves

Before you buy a gift card, examine it carefully. If the packaging has been bent or torn, or if the security code on the back has been scratched open, don’t buy it. It might be a consumer trap laid by an activation code thief.

Here’s how this scam works. The thief copies the number on the back of the gift card and puts it back on the shelf. Then, they keep calling to confirm the card’s balance. As soon as you’ve purchased the card and the balance becomes activated, they spend it all online.


Threat #3: Shady Online Sellers

Often, individuals sell gift cards at a discount on marketplace sites like Craigslist and eBay. The ad listing might say that they received a card for a store they never visit, so they’re just trying to exchange it for cash — you may stumble upon deals like a $100 Target gift card for $75.

Unfortunately, it’s very easy to get ripped off by purchasing a gift card from an unauthorized source. There’s no guarantee that the gift card you’re buying will work. In some cases, the seller may arrange to make the transaction in person by meeting you at a safe public location like a coffee shop or a mall. They’ll even encourage you to call the number and confirm the card balance.

But as soon as you hand over your money and leave, they open up their laptop and promptly spend the card online. Or they use a little sleight of hand and swap the real card with a fake.


How to Stay Safe

The good news is that it’s easy to protect yourself from gift card scams. Just make sure you only buy gift cards from an authorized retailer (such as the store itself or an official affiliate store), never buy a gift card that looks like it’s been tampered with, and always get a receipt.

Are you planning to buy any gift cards for your friends and family this year? Do you like to get gift cards instead of presents? Tell us what you think in the comments below.


See Also

FTC To Free Gift Card Text Message Spammers: “Game Over”
Scambook Case Study: $1000 Walmart Gift Card Scam
Free $1000 Walmart Gift Card Text Message Scam

Image sources

401 (K) 2012

About The Author

Miranda Perry is the staff writer for, where she blogs about consumer issues, fraud and cyber security. She hopes to inspire readers to think critically about the world around them and take action to improve their lives.

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