St. Louis, Mo-(Effingham Radio)- A spike in reports from consumers who said they were scammed out of money by using gift cards has the Consumer Fraud Task Force advising consumers to use caution if instructed to purchase the cards. Consumers should not purchase gift cards if being asked to pay off a debt or send fees to collect a sweepstakes or lottery prize or to help someone found on an online dating site.
Money applied to popular gift cards like Apple iTunes and Google Play can only be spent on products and services from those companies. However, scammers are coaxing people into purchasing cards and giving them the PIN number off the back of the cards, which allows them access to the funds. According to the Federal Trade Commission, gift cards are the most popular method of payment in imposter scams.
Scammers will pose as a well-known business, family member, friend, government agency or law enforcement in an attempt to defraud someone. The scammers will tell their victim to go to a specific store and purchase a specific card.
Through the first three quarters of 2018, gift cards were reported as the payment method in 26 percent of fraud reports, according to the FTC’s Consumer Sentinel Database. In 2015, only 7 percent of fraud victims reported paying through gift cards.
After reporting $40 million in losses to gift cards in fraud reports in 2017, that number rose to $53 million through September 2018. The median loss in these cases is $500, according to the FTC.
Consumers made more than 1,000 reports about gift cards to Better Business Bureau’s (BBB) ScamTracker in 2018.
The U.S. Department of Justice recently put a stop to an international operation that forced victims to purchase gift cards as part of the scheme.
In July 2018, two dozen members of an India-based fraud and money laundering conspiracy that defrauded thousands of U.S. residents out of millions of dollars were sentenced to federal prison in Houston, Texas, in a case prosecuted by the U.S. Justice Department. Some of the defendants were sentenced to up to 20 years in federal prison for their roles in the conspiracy. The defendants worked out of India-based call centers and targeted Americans through various telephone fraud schemes. Between 2012 and 2016, the defendants were found to have operated a complex fraud and money laundering scheme where those working in the call centers impersonated officials from the IRS and U.S. Citizenship and Immigration Services. Victims were threatened with arrest if they did not provide funds by purchasing gift cards or wiring money.
In order to protect yourself from being caught in a gift card scam, the task force offers the following tips:
- Don’t pay using a gift card. No reputable company will ask for payment using a gift card. If you receive a call demanding that you must pay using a gift card, just hang up. Scammers use scare tactics by threatening you with jail time unless you pay immediately with a gift card. This is a tactic to get your hard-earned money.
- Register your gift card. If a retailer allows you to register your gift card, take advantage of that option. Registering your card makes it easier to keep track of any misuse and can potentially end up protecting money stored on it.
- Report it. If you believe you have been a victim of gift card fraud, report it immediately to the company that issued the card. It may not be possible to stop funds from being withdrawn, but the company should be alerted to the fraud. Also, file a complaint to BBB’s ScamTracker and with the FTC.
The Consumer Fraud Task Force, formed in October 2002, is a coalition of local, state and federal government agencies and nonprofit business and consumer groups in Missouri and Illinois that work together to protect consumer and donor rights and guard against fraud.
The group has tackled predatory payday loan offers, tax scams, timeshare reselling fraud, credit repair and foreclosure scams, bogus sweepstakes, internet sweetheart scams, phony grant scams, home remodeling, and a variety of other issues.
To obtain information, or to report a scam, you may contact members of the Task Force:
- Better Business Bureau Serving Eastern and Southwest Missouri and Southern Illinois – (888) 996-3887; www.bbb.org
- Federal Trade Commission – (877) FTC-HELP (382-4357); www.ftc.gov
- Illinois Attorney General – (800) 243-0618; www.illinoisattorneygeneral.
gov - Missouri Attorney General – (800) 392-8222; www.ago.mo.gov
- U.S. Attorney, Eastern District of Missouri – (314) 539-2200;www.usdoj.gov/usao/moe
- U.S. Postal Inspection Service – (877) 876-2455; postalinspectors.uspis.gov
- U.S. Secret Service – (314) 539-2238; www.secretservice.gov