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Gift Card Payment Scams on the Rise

Find out how you can spot and avoid these schemes

Gift cards

Getty Images/AARP

Kathleen Kleinert:

It was very nice to hear these things from this man and unfortunately, I sent him far too much money and ended up completely broke myself.

Bob Edwards:

Gift cards are convenient and popular, but they're often favored by criminals. Con artists have latched onto gift cards as a convenient form of payment for their schemes. Today, we hear from a woman whose savings were drained in one such scam. And later, Kathy Stokes, Director of Fraud Prevention Programs at AARP Fraud Watch Network discusses how to identify the warning signs.

Kathy Stokes:

If they can convince us when they have us in that heightened emotional state, and we're going to believe pretty much anything they say, we’re going to do it.

Bob Edwards:

That’s coming up next.

Hi, I’m Bob Edwards with An AARP Take on Today.

Kathleen Kleinert from Philadelphia was browsing Facebook last August when she received a friend request. It was from a man named Tony.

Kathleen Kleinert:

Normally I ignore those things. I get several of those a week because I'm listed as a widow on my profile. So, I'm sure that attracts these kinds of people, but this particular request, it just said something to me.

Bob Edwards:

Kate decided she liked him well enough to start talking over Facebook and text. She was skeptical but he was persistent

Kathleen Kleinert:

The picture he sent, he was a very handsome man, said he was a surgeon working for the UN in a contract over in Iraq and he just seemed so genuine and very nice. after a while, we were talking to each other five, six times a day on the phone.

Bob Edwards:

Kate said that Tony didn’t ask for money for the first few months of their relationship. In that time, she said she fell in love with him. So when he finally did ask for money, he said it was an emergency.

Kathleen Kleinert:

So, of course I was going to help him because by that time I was falling for him, and that just began the whole cycle of, there was always some very good reason why he needed me to send him a gift card.

Bob Edwards:

He gave her access to see his bank account to prove that e could pay her back. His excuse was that he couldn’t pay her back because he was overseas. Kate said se was in a vulnerable position. Her husband had died 11 years ago, and Kate was feeling that there was a piece missing from her life.

Kathleen Kleinert:

After a while, he talked about getting married and wanting to spend his life with me and what have you. It was very nice to hear these things from this man and unfortunately, I sent him for too much money and ended up completely broke myself.

Bob Edwards:

The story began to unravel for Kate. Now he’s saying he went to an American prison and needed money for various expenses, but at that point, Kate had no more money to give. She realized she had experienced a scam. She called the police, but said she received no help—but that’s not how Kate’s story ends. She then called AARP’s Fraud Watch Network help line.

Kathleen Kleinert:

The people there were so wonderful and so supportive. And the man I spoke with asked me if I would be willing to tell my story and I said, "I would." It's gotten easier to tell my story now. I don't cry nearly as much as I did when I started, but it's easier to be angry rather than hurt by it now. I have three sisters and I was very worried about telling them and I scheduled a Zoom so that we could all talk at the same time and every one of them said how proud they were of me, that I was coming forward with my story and how brave I was to tell it, which absolutely surprised me. I really was expecting them to yell at me or ask me how I could have been so dumb, but none of them said that to me at all.

Bob Edwards:

Kate Kleinert says that everyone she’s told her story to have been supportive. She hopes more people will come forward with their own experience with scammers. When we return, we’ll hear from an expert on fraud prevention

Bob Sullivan:

I’m Bob Sullivan, the new host AARP’s The Perfect Scam Podcast and with Frank Abagnale and other top fraud experts, were bringing you brand new episodes of Americas most shocking scam stories.

Woman:

I got an email alerting me to 22 accounts that had been opened up in my name.

Man:

The scam was masterfully designed.

Bob Sullivan:

New episodes available now. Subscribe to The Perfect Scam Podcast on apple podcast, Spotify or wherever you get your podcasts.

Bob Edwards:

According to the Federal Trade Commission, Americans reported losing $3.3 billion to fraud in the year 2020, up from 1.8 billion in 2019. But they say the true number is likely higher since the figures only reflect voluntarily reported crimes. Today, we're focusing on gift card payment scams. AARP's Fraud Watch Network reports that gift cards are one of the top fraud payment methods because they're so convenient for scammers. The group has launched a three-year initiative to combat gift cards used as payment in scams. Here again to talk about the usefulness of gift cards to scammers and how to spot a scam before it begins is Kathy Stokes, director of fraud prevention programs at AARP Fraud Watch Network. Welcome back, Kathy.

Kathy Stokes:

Thanks for having me. Good to talk to you again, Bob.

Bob Edwards:

What separates gift cards from other forms of payment for scammers?

Kathy Stokes:

They're ubiquitous. You can walk into about any retailer, from your hardware store to your pharmacy to your grocery store and on and find the racks. They're abundant, and scammers know we're accustomed to seeing them and buying them. And if they can convince us when they have us in that heightened emotional state, and we're going to believe pretty much anything they say, that it's a good idea to take care of this problem by buying a gift card, we're going to do it. And then they have easy access to the money on that card as soon as we give them the numbers, so it's easy cash for them.

Bob Edwards:

If you're approached by a stranger online or by phone, how do you know if they're trying to defraud you?

Kathy Stokes:

The big red flag is the fact that they're asking you to pay some obligation with a gift card. Any time somebody says that you can take care of some obligation by buying a gift card and sharing the numbers off the back, any time, it's a scam.

Bob Edwards:

From the perspective of a scammer, how do they seek out potential victims?

Kathy Stokes:

There's a whole wide range of ways that scammers seek to target people. They use headlines. They've had ample opportunity during the course of the pandemic to chase headlines and create scams around them. It's not just been about the pandemic, though. They can pretend that they are someone in authority, and you will react to it in kind. For example, the most common scams are when a scammer poses as a government official. In many cases, it's the Social Security Administration, and they've convinced the target that their Social Security account has been suspended and they need to take immediate action. It's taking the headlines where someone's already in a heightened emotional state, getting them even higher, and then going in for the kill.

Bob Edwards:

What can someone do to get their money back if they're involved in a scam?

Kathy Stokes:

The big problem is you really can't do much. The scammers have a way of, as soon as you give them those numbers, of draining the value of that card. Sometimes they're actually using the value on that card to purchase from that retail establishment, but more often than not, the money is being converted to cash or Bitcoin, other cryptocurrency. If you realize almost immediately after this has happened that it was a scam, you can call the issuing company immediately and tell them what happened, and they can look and see if there's any value left on that card and get you back that value possibly. But in most cases, there isn't any value left.

Bob Edwards:

What personal information do criminals typically need to get out of you in order to make their scams succeed?

Kathy Stokes:

In the case of using the tactic of gift cards as payment, nothing. All they need to do is get you in a space where you believe that the easiest way to handle this very serious or very exciting opportunity in the case of maybe it's you've won a million dollars and a Maserati, and all you have to do is pay the taxes up front with a gift card. They don't need any information from you. But if their ploy is related to any other scam and they're seeking identity, really any identifier they can get off of you is going to be of value to them. But they're really looking for name, date of birth, Social Security number. Those are the key.

Bob Edwards:

And what steps would a person take if they paid someone with a gift card already?

Kathy Stokes:

I think the first thing they should do is try to see if they can get their money back by calling the issuing company. They really do need to go back to that retailer and tell them what happened. And it's important to report this. Even though reporting it isn't going to get you your money back, if you report the information to authorities, that data can be used to create fact patterns, and so the investigators can go after these bad actors. And you can go to ReportFraud@ftc.gov, or you can call our help line at the Fraud Watch Network. All of those reports go into the Federal Trade Commission who collects all this data. And you get the benefit of talking to a trained Fraud Watch volunteer who can walk you through what happened and help you with any action steps you need to take. And that number is (877) 908-3360.

Bob Edwards:

Any other resources available?

Kathy Stokes:

We have a dedicated page to this whole scourge of gift cards as a form of payment. If you go to AARP.org/giftcards, you can read all about it. We're going to be updating periodically information on what we're trying to do to work with retailers to test intervention strategies. We figured if we can get somebody at that point of sale from realizing it's a scam and not putting that money on the card and then giving the numbers off to the scammers, we've won. And so we want to test what we can do that would work in that scenario. So, stay tuned for more at AARP.org/giftcards.

Bob Edwards:

Kathy Stokes, who's director of fraud prevention programs at AARP Fraud Watch Network. Thank you, Kathy.

Kathy Stokes:

Thanks, Bob.

Bob Sullivan:

That’s it for this week’s show. Thanks to our news team. Producers, Colby Nelson, and Danny Alarcon.  Production Assistant Bianca Trotter. Engineer, Julio Gonzalez. Executive producer, Jason Young. And of course, my cohosts, Wilma Consul and Mike Ellison.

If you liked this episode, share it with a friend and become a subscriber on Apple Podcasts, Google Podcasts, Stitcher, or other apps. And be sure to rate our show as well. You can also email us at newspodcasts@AARP.org

For an AARP Take on Today, I’m Bob Edwards, Thanks for listening.

Gift cards are convenient and popular -- and they're favored by criminals. Con artists have latched onto gift cards as a convenient form of payment for their schemes. Today, we hear from a woman whose savings were drained in a gift card scam. Also, Kathy Stokes, Director of Fraud Prevention Programs at AARP Fraud Watch Network, discusses how to spot and avoid these schemes.

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