More than a third of U.S. adults have been asked by a scammer to pay a fake fee, debt or other financial obligation with a gift card, a new AARP survey finds. About a quarter of those targeted bought gift cards and shared the numbers with the crooks, losing an average of $200.
“Criminals are most likely to convince people to purchase gift cards to ‘pay fees’ to claim sweepstakes winnings or ‘pay upfront’ for some product or service,” says Kathy Stokes, director of fraud prevention programs at AARP. “Or they impersonate a friend or coworker to coerce their targets to do them a favor by purchasing gift cards.”
The sweepstakes scenario was the most common tactic in gift card payment scams, reported by 15 percent of survey respondents. Next most popular was being asked to pay in advance for a service or product (12 percent), help out a friend or colleague in need (12 percent each) or pay someone’s phone or utility bill (10 percent).
Con artists posing in scam calls as tech support experts or government agents might also demand urgent payment to supposedly fix a computer problem, satisfy a tax bill or clear up an issue with your Social Security number. No matter what the pitch, anyone asking you to pay them with a gift card is a scammer, according to the Federal Trade Commission (FTC).
The FTC logged more than 64,000 complaints about scams involving gift card payments in 2021. Consumers in those cases reported collective losses of $233 million, an 88 percent increase from 2020.
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‘Zero-value’ gift cards also common
The AARP Fraud Watch Network, in collaboration with the University of Chicago-based AmeriSpeak Omnibus survey, polled 2,179 people age 18 and older in January and February to gauge consumer experiences with two types of gift card fraud: payment scams and “zero-value” gift cards, when a consumer gives or receives a card that turns out to have no funds on it.
About a quarter of those polled said they had encountered the second type, which typically involves crooks tampering with cards on store shelves to obtain the numbers on the back, allowing them to drain the cash consumers load on them at point of purchase.
While some zero-value episodes could be due to store errors or people forgetting they’ve already used a card, “the fact that 1 in 4 consumers have experienced giving or receiving a card with no value on it points to criminal activity,” Stokes said. The average loss in such cases was $140, the survey found.
Eighty-four percent of those who received an empty gift card took steps to try and resolve the issue, such as calling the phone number or visiting the website listed on the card or talking to a manager at a store where they tried to redeem it, but more than half were told they could not get a refund or credit.
Younger adults targeted more
The survey found an age disparity in gift card payment scams, with 39 percent of respondents ages 18 to 49 reporting being targeted versus 28 percent of those 50-plus.
However, older adults were more likely to want legislative action to combat fraud. Among respondents age 50 and older, 69 percent said they “strongly agree” that lawmakers should do more to shield consumers, compared to 54 percent for the younger group.
AARP has called for tougher regulations and greater law enforcement action to clamp down on scams, and for retailers, payment processors and card issuers to take steps to prevent consumer losses, such as in-store interventions and more flexible refund policies.
According to the survey, about 1 in 4 consumers who purchased gift cards to pay a supposed financial obligation were warned by a store employee that it might be a scam. Previous AARP research has found more than half of potential scam victims avoid losses when a third party intervenes.
Andy Markowitz is a contributing writer and editor for AARP, covering Social Security and fraud. He is a former editor of The Prague Post and Baltimore City Paper.