Gift card scams are on the rise among consumers
Gift card scams are on the rise and cost North Americans at least $148 million in the first 9 months of 2021. Here’s our advice on how you can prevent and resolve these types of scams as they happen — and how to keep your finances safe.
Today’s consumers and businesses are at increased risk of unsolicited cyber risks — since the onset of the COVID-19 pandemic, cybercrime has increased by 600%. Today’s break-ins are more likely to be through email or SMS inboxes than a front door.
Cyber attackers are rapidly expanding and adjusting their scams to include tactics that target individuals as well as businesses alike, but result in the same outcome: financial losses. There are many types of personal and business cyber scams, examples of which include personal email compromise, payroll diversions, invoice fraud and now — gift card scams.
What is a gift card scam?
Gift card scams play out like many other types of email or phishing scams where an individual is convinced to take an immediate action of making a wire transfer or another type of payment, leading to the theft of funds. An FBI alert highlighted that identified global losses in Business Email Compromise (BEC) scams increased by 65% between July 2019 and December 2021 to $43 billion. In the first nine months of 2021, gift card scams accounted for $149M in the US.
“In many cases clients feel embarrassed about being tricked into a gift card scam which means that they often go unreported” says Det. Doris Carriere, who works in the financial crimes unit for Durham Regional Police. With the growing rise of these types of scams, BOXX’s Cyberboxx Home cyber protection coverage can quickly help customers recover the lost funds and also provide advice for consumer to protect themselves from future incidents.
The rise in gift card scams
Gift cards should account for personal purchases made for gifts to known individuals, and not be used for payments. As soon as someone tells you to pay them with a gift card, it’s a red flag and most likely signals a scam. Once they have the gift card number and the PIN, they have your money.
Gift cards are popular with scammers because they’re easy for people to find and buy online or in-store. They act like cash and have fewer protections for buyers compared to some other payment options.
Here’s how you can detect a gift card scam:
- The caller says it’s urgent. They say you have to pay right away or something terrible will happen. They want to scare or pressure you into acting quickly, so you don’t have time to think or talk to someone you trust.
- The caller usually tells you which gift card to buy. They might say to put money on a VISA, eBay, Google Play, iTunes of gift card. They might send you to a specific store. Sometimes they tell you to buy cards at several stores, so cashiers won’t get suspicious. And the caller might stay on the phone with you while you go to the store and load money onto the cards.
- The caller asks you for the gift card number and PIN. The card number and PIN on the back of the card let the scammer get the money you loaded onto the card, and use it immediately.
What to do if you’ve been impacted by a gift card scam:
- Report the scam. Report the scam to your national or regional fraud prevention hotlines. In the Canada it’s the CFTC, in the US it’s the FTC. It’s also useful to report it to your local police service, as the report may help in the future if the assailant is caught. According to the FTC, less than 5% of gift card spams are reported — reporting these scams could influence future legislation and controls to prevent them.
- Contact the gift card issuer and keep your receipt. Some companies like Amazon and Google have reporting hotlines that might be able to help, but this is dependent on your individual situation.
- Contact BOXX Insurance. If you are a BOXX client and you believe you’ve been the subject of a gift card scam, let our team know as soon possible, in certain circumstances, the lost funds could be recoverable.
- Invest in personal cyber insurance. As these scams continue to rise, it’s important to be vigilant. Our team led by Neal Jardine, Global Cyber Risk Intelligence & Claims Director, is continuing to be alarmed by the swiftness in which scammers can move funds, which means it’s vital to be alert and to protect yourself from these types of scams.
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