Gift Card Scams

Have you been told you’ve won a prize but need to make a gift card payment to receive it? Or have you ever purchased a gift card only to discover it was empty? These are two examples of gift card scams.

Gift card scams trick victims into buying a gift card and sharing the card details that scammers can then use to steal money or make purchases. They usually begin with scammers contacting victims and claiming there’s an urgent need to send money. They then demand payment in the form of gift cards — often from popular brands like Amazon or Walmart — because they’re fast and hard to trace.

There are two main types of gift card scams: gift card payment scams and gift card draining:

Gift card payment scam: also called imposter scam, cybercriminals impersonate as an authority or someone trustworthy – like a family member, tech support, or government official – to convince people to give gift cards away under false pretenses. Using high-pressure tactics, they rely on their targets to panic.

Scammers may make contact via phone, text, or email and use social engineering tactics to convince a target that:

  • They haven’t paid their taxes.
  • They’re behind on mortgage payments.
  • They owe hundreds of dollars in speeding tickets.
  • They’ve fallen behind on their utility bills.
  • They have another type of debt or bill they need to pay urgently.

Gift card draining scams: fraudsters steal money from gift cards directly, often without ever making contact with the victim. Scammers may tamper with gift cards in stores, hack into gift card databases, or take over online accounts to spend any unused funds.

9 common types of gift card scams

1. IRS scam. Fraudsters will contact you via phone, text, or email claiming to work for the IRS and saying you owe unpaid taxes. Threatening further action if you don’t pay immediately using gift cards. The scammer will request the gift card numbers and PINs to “settle” your balance. Once they have the gift card info, they are free to make online purchases. If you owe the IRS money, you’ll receive a bill in the mail, not a threatening phone call, text, or email. And no government institution, the IRS included, will ever ask for payment

2. Bots scam. Scammers may use bots — software designed to automate online tasks — to hack into online gift card accounts and drain unused funds from users’ gift cards. Once a gift card bot finds a valid card number and PIN, scammers can sell the information or use it to make purchases. When a legitimate customer buys the associated gift card, they’ll find that the balance has been drained, leaving the gift card worthless.

Use your gift cards as soon as you receive them. This reduces the chances of hackers stealing your balance. If you purchase a drained gift card, contact the issuer immediately.

3. Cashier scam. Cashiers in retail stores may be the culprit. Activating the gift card when you purchase it, they will then switch it with an inactive card. The cashier keeps the activated card, leaving you with one that won’t work.

Watch cashiers during the checkout process. Make sure they hand the gift card straight back to you as soon as they activate it.

4. Magstripe scam. Thieves can use magstripe (magnetic stripe) readers — devices that scan, read, and store the details on the back of a plastic card — to steal gift card information. Fraudsters target stores like Walmart or Target that have gift cards on display, scan them with the reader, and then return them to the rack.

Later, they’ll call customer service to determine if any of the gift cards they scanned are activated. If they are, they can use them to make online purchases, draining the money from the cards of unsuspecting future customers.

Be careful buying gift cards off publicly displayed racks in retail stores. If you do, make sure to check and confirm that the balance is accurate as soon as possible after purchase.

5. Online auction scam. Buying gift cards from online auction sites or gift card resellers can put you at risk of being scammed, by selling you inactive or expired gift cards.

Don’t buy gift cards from online auction sites or resellers. If you want to buy gift cards online, buy them directly from the retailer offering them.

6. Fake prize scam, In a fake prize scam, you’ll receive a phishing email, call, or text from a scammer claiming you’ve won a trip, a new car, or a cash prize from a lottery or contest. They’ll claim you will need to pay a fee using a gift card to claim or redeem your prize and share the card number and PIN with them.

No legitimate lottery, sweepstakes, or business will ever ask you to pay a fee to claim your prize — especially not with a gift card.

7. Utility bill scam. This scam involves fraudsters posing as utility representatives, claiming you owe money for gas or electricity. Even if you’ve paid your bills on time, you may receive a call demanding immediate payment to avoid disconnection. The caller will often instruct you to purchase a specific gift card to make payment and request the card details over the phone or via text or email.

Your utility company won’t threaten to shut off your power or water without giving you plenty of warning and time to pay back what you owe. No utility company will ever ask you to pay in gift cards.

8. Boss scam. Some scammers may impersonate your boss or manager and send you a text or email asking for a “quick favor” that they’ll later repay. They might use urgency tactics, insisting they need gift cards for a company event or to give to a client. Once you buy the gift cards and share the numbers and PINs, the scammer drains the money.

The scammer might also use a spoofed email address or hack into your boss's account to make the request seem legitimate. They may also find your LinkedIn profile to gather information about your role, company, or professional network that they can use to convince you.

Always verify any unusual requests by contacting your boss directly using a known phone number. Avoid sharing your email or phone number on social media platforms like LinkedIn.

9. Account takeovers. Using phishing techniques, cybercriminals will try to get access to your login information for accounts on online marketplaces like Amazon. Once they have access, they can use verification-free one-click payment methods to purchase gift cards for themselves, which they can then use to go on an online shopping spree. Alternatively, they may spend gift cards that have already been registered to your account.

Be on the lookout for phishing attempts, and disable one-click payment for online stores if you want an added layer of protection. If you receive a gift card, use it as soon as possible to reduce the risk of hackers stealing it.

How to help protect against gift card scams

Investing in an anti-malware engine will help you identify scams and phishing attacks so you can avoid attacks designed to trick you into exposing sensitive personal details.

Be skeptical of unsolicited contact especially if you receive an unexpected call, text, or email from a number or email address you don't recognize. Be particularly wary if the person contacting you attempts to create a sense of urgency, pressuring you to respond quickly.

Inspect gift cards carefully, checking or any signs of tampering or damage. Signs that a card is compromised include scratched-off PINs or packaging that appears in poor condition. Check that the number on your gift card matches the number on your receipt.

What to do if you’ve been gift card scammed:

Report the scam to the gift card company:

Report the scam to the FTC

Next, report the scam to the Federal Trade Commission (FTC) at ReportFraud.ftc.gov. Reporting fraud can help the authorities track down scammers and reduce the likelihood of other people getting scammed in the future.