States Target Gift Card Scammers With New Penalties and Consumer Warnings

AARP has notched wins in 11 states this year as it fights back against gift card fraud

Miriam Cross,

AARP

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Published September 16, 2025

AARP (Shutterstock, Getty Images)

Scammers who impersonate government agents, romantic prospects or IT specialists often use gift cards as a way to siphon money from their victims. Other times they bypass individual targets entirely and drain the value of the gift cards sitting on store shelves before an unsuspecting buyer has even taken one off the rack.

That’s why AARP is attacking the problem of gift card fraud from both sides.

In 2025 alone, AARP supported the successful passage of laws in 11 states related to one of these forms of fraud. We achieved wins in Delaware and Maryland in 2024 and in Rhode Island in 2023. It’s part of a larger swell of advocacy work in the financial security space, which includes fraud, consumer protection, retirement and other pocketbook issues. AARP racked up 137 financial security wins in the first six months of 2025, a 71 percent increase over the same period last year. More than half of that increase comes from AARP’s fraud and consumer protection work, which spans cryptocurrency kiosks, report-and-hold laws, gift cards and more.

“By creating a legal framework that specifically addresses gift card fraud, it helps to deter criminals and provide a clearer path for law enforcement to prosecute these crimes, ultimately protecting consumers from financial harm,” says Françoise Cleveland, government affairs director at AARP.

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In a 2022 AARP survey, 34 percent of U.S. adults reported that they or someone they know had been targeted by scams seeking payment by gift card, while 23 percent had given or received gift cards that had no funds on them.

Jina Ragland, associate state director of advocacy and outreach at AARP Nebraska, notes that cryptocurrency kiosk scams may make a bigger splash in the media, “but gift card scams are still happening.” Her team helped support the passage of legislation in Nebraska earlier this year that addressed both in one bill.

Here is how each type of gift card fraud works and the changes AARP is pushing to discourage these crimes.

Fraud That Personally Targets Individuals

The first kind of gift card scam involves manipulating a victim into helping the scammer succeed. An impostor spooks someone into paying a fake bill, debt or other obligation by purchasing a gift card and reading them the serial number and PIN over the phone — sending the money directly to the scammer’s pocket.

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AARP is pushing for statewide measures such as training retail employees to spot red flags (for example, a customer bringing multiple high-value gift cards to checkout as they speak to someone on the phone) as well as mandating signage in stores that warn consumers about this scam. AARP is also calling for penalties when retailers don’t follow the rules.

AARP backed the successful passage of legislation in Nebraska and New Jersey this year that addresses this type of fraud.

In Nebraska, for example, the new bipartisan law requires that sellers post prominent notices warning consumers about the risk of fraud and that the attorney general’s consumer protection division develop model language reminding consumers that gift cards should only be used for gifts. The attorney general may issue citations to violators, starting with a warning and climbing to civil penalties of up to $250. The legislation went into effect Sept. 2.

“No matter how urgent the matter, we want people to stop and pause,” Ragland says. “Hopefully, the signs will trigger someone to think about it before they make the purchase.”

Multiple Parties Fall Victim to Tampering

Criminals may steal a gift card’s value before it is ever sold to a consumer. They do this by scratching off the strip on the back to find the PIN before resealing the package, or using electronic devices to capture and clone the card’s data. The person who buys an empty gift card now must struggle to get reimbursed, while the intended gift recipient loses out as well.

“Gift card fraud often begins with deception—whether through tampered packaging or coercive scams—and has become a widespread concern for consumers and businesses alike,” Cleveland says. Victims lose their hard-earned money with little chance of recovery.

To counter this problem, AARP joined forces with the gift card and retail industries to push solutions. AARP supported the successful passage of legislation this year in nine states — Arizona, Arkansas, Florida, Iowa, Kentucky, Louisiana, New Hampshire, North Carolina, Texas — that targets schemes to obtain gift cards fraudulently and penalizes those caught more severely.

“Does law enforcement have the right penalties or charges to arrest the folks that have tons of cards in their car?” says Cleveland.

In 2024, legislation that AARP supported in Maryland had a national impact. The Maryland law required gift card manufacturers to make their packaging more secure. After this law passed, Target announced that buyers could only obtain the PIN to their gift cards by bringing the card to checkout, rather than finding it on the card. That means a thief can’t secretly drain the value of a card once a buyer loads and activates it.

The Maryland law also required the state attorney general to create a model warning notice for retailers to display at their gift card kiosks and required stores to train their employees to recognize gift card fraud.

One reason AARP has been so successful this year is that we’ve lobbied legislators in tandem with the Gift Card Fraud Prevention Alliance, an entity formed in 2024 to educate lawmakers and the public about the topic, Cleveland notes. AARP illuminates the victim’s perspective while the alliance represents the retailer’s side.

“We come in as a united front,” Cleveland says.

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Miriam Cross is a writer for AARP covering advocacy issues. She previously worked at American Banker and Kiplinger’s Personal Finance.

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