The Social Swipe: How Credit Cards Are Using Social Media

You should also refrain from clicking on links inside the body of the email, Levin says, since hackers are known to send emails under the guise of a legitimate company in an attempt to get people to download malware onto their computers.

Instead, he suggests going to the company website directly to sign up for the promotion. Once you are registered, make sure to check your credit card statements regularly for the campaign’s duration. That way, you can catch any fraudulent charges as soon as they occur, should an actual hack take place. 

A Free Sweepstakes Isn’t Always Free

According to Woolsey, the Internal Revenue Service requires taxpayers to report prizes totaling $600 or more when they file their taxes.

Luckily, he says that most social media promotions mirror credit card rewards programs, which are essentially billed as a rebate and are not going to require you to pay taxes on the rewards at the end of the year. 

“It’s the structure of the promotion that matters,” he says.

As such, consumers should be aware that a social media sweepstakes that involves, for example, raffling off a free car to one person who “likes” a Facebook page, will require taxes to be paid on the prize.

You can find additional information on what to do should an online data breach occur in this MainStreet article.

—Jeanine Skowronski is staff reporter for MainStreet. You can reach her by email at Skowronski.jeanine@thestreet.com, or follow her on Twitter at @JeanineSko.