5 Tips to Avoid Gift Card Scams

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NEW YORK (MainStreet) — Consumers who love to give gift cards to everyone on their holiday gift list need to express some extra caution this year. Senator Chuck Schumer (D-N.Y.) issued a press release on Monday that warned consumers to be on the lookout for a new gift card scam that’s becoming increasingly popular this holiday season.

Scammers reported obtaining account information from the back of cards on display, waiting some time for the cards to be bought and activated, and then using the cards online before the intended recipient even gets the gift card. The deception leads consumers to “gift” cards to recipients with $0 balances on them.

The scam is unfortunate, since gift cards are immensely popular this year – according to the  National Retail Federation (NRF), Americans plan to spend a total of $27.8 billion on the plastic present this year, with each consumer shelling out an average of $155.43. That’s up from $145.61 last year.

Schumer wrote a letter urging the NRF and the Retail Gift Card Association (RGCA) to consider greater security measures to protect cards from scammers and tampering. In the meantime, here are a few ways to avoid falling prey to a gift card scam:

Check the back of the gift card before buying it. Gifts come with both an account number and a concealed PIN or access code that allow for use online. Account numbers are readily displayed on the back of the card, but PINs are usually concealed by a small scratch-off film. Consumers should check to make sure this film is still intact before purchasing a gift card, Schumer says.

Ask to buy a gift card that is behind the counter or not on display. Cautious consumers can also stick to buying gift cards that are locked in plastic displays to minimize the chances of purchasing one that has been compromised.

Give the receipt.
According to the  RGCA, most retailers will replace the verified balance remaining on a card if it is lost or stolen as long as you have the receipt.

Buy electronic gift cards. An increasing number of retailers let consumers purchase digital gift cards that can be emailed to recipients directly, and some digital gift cards are loaded with perks their plastic counterparts don’t offer.

Ditch the gift cards altogether. In addition to being susceptible to scams, gift cards can lead consumers to overspend, they are sometimes loaded with fine print and they may be perceived as impersonal presents. You can find some great gift ideas in this MainStreet video, which suggests cool alternatives to cheesy holiday gifts.

—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.

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