Tips For Avoiding Gift Card Fraud & Scams

Below is a guest post from reader TDD with tips on avoiding gift card scams. This is a topic relevant to many of us who buy gift cards to meet minimum spend requirements or lock in a category bonus or take advantage of a discount deal. We’ve seen and heard of various scams that people have lost money on. Feel free to chime in below to discuss your own thoughts and ideas in the comments below. 

Best practice tips to reducing your chances of losing gift card balances to fraud and/or theft.

Before purchase

Determine what your purpose is to help decide if you really should buy the gift card:

1. If you want a VISA/MC/AMEX card to present as a gift, you probably should just give cash or a check – prevent the (probably not-so-vigilant) recipient from having fraud issues.
2. If you want a VISA/MC/AMEX card to use progressively like a credit card, you should probably skip the purchase. Just use your credit card. You should only buy VISA/MC/AMEX cards with the intent of using the full balance quickly.
3. If you want a store-branded card with no immediate plans to use it, either skip the card all together, or get a different store brand that you would plan to use quickly (or load into an account and mark the card as used, like NetFlix or Amazon).
4. If you want a store-branded make sure the branded store isn’t close to bankruptcy (or already in bankruptcy). Some stores are slow to refresh their gift card rack. I don’t think you want to be buying a branded gift card to Bed Bath & Beyond at this particular point in time (Jan 2023).

For purchasing cards online:

1. Make sure the site you are buying from is legitimate (official stores, Raise.com, etc.). Make sure you are using the actual site and not a scam site (check your browser’s URL bar).
2. Double check the delivery email (or street) address for typographical errors.
3. Avoid buying cards from marketplace sites like eBay, Facebook or Craigslist. Only buy gift cards from reputable retailers where you will have some form of recourse if something goes wrong.

For purchasing cards in-store:

1. Select a card preferably from the middle of the display rack. While this isn’t a surefire way to avoid fraud (since criminals could in theory duplicate every card on the rack) criminals generally focus on defrauding cards towards the front of the display rack.
2. If you are buying a gift card for the store you are buying it from (e.g. buying a Target gift card at Target), you should strongly consider buying it from the customer support desk. The cards they have at the customer support desk are less likely to have had tampering as they probably were never on the display rack (not a guarantee, but more than likely).
3. Always check the card/packaging very carefully:
   1. For cards with an expiration date (e.g. VISA/MC/AMEX), check to make sure the expiration date is sufficiently in the future.
   2. Make sure the card feels right compared to other cards in the rack – criminals can make fake duplicates.
   3. Make sure there are no unusual barcode stickers covering the actual barcode (barcodes are never a sticker).
   4. Make sure the package hasn’t been previously opened (e.g. Apple gift cards have a special protective one-time use strip).
   5. If visible, make sure the magnetic payment strip is good condition (e.g. no scratches or bends).
   6. If the card has a scratch-off area, make sure the area hasn’t been previously scratched off.
   7. If the card has a scratch-off area, make sure there are no unusual stickers covering the scratch-off area (compare it against other cards in the rack for consistency).
   8. Make sure there are no fake activation stickers on the card. Almost all (if not all) gift cards bought in stores do not require further activation after purchasing them at the tender.

During/after purchase

For purchasing gift cards online:

1. Delivery is usually stated as less than 24 hours for most stores, however it generally should be much quicker than that (under 1 hour). If you haven’t received your card after 24 hours, contact the site you purchased it from.
2. Immediately print the card, or write it down somewhere. Sometimes the link to a gift card will expire (it is not a usual occurrence, but it can happen). While you can always contact the company for a new link, it is just another headache you can avoid. Printing it will make sure you never lose it.
3. After you print (or write down) the gift cards you should delete all emails referencing the card. You can’t lose your gift cards to someone who hacks your email if the cards aren’t in your email inbox.

For purchasing cards in store:

1. If you do assisted checkout with a cashier, never lose sight of your card and make sure the cashier scans/swipes the card you hand them and hands it back to you. There have been cases of cashiers scanning/swiping a card but handing the customer a blank. In other words, the cashier is the scammer. (This, of course, is not an issue if you do self-checkout. Self-checkout is always preferred, but many stores, like Best Buy, lack self-checkout).
2. Immediately after purchase (for both assisted and self-checkout), confirm that the barcode number printed on the purchase receipt matches the barcode on the package. If it doesn’t match, make sure to alert the cashier immediately for a replacement. (The receipt always prints out with some amount of barcode, full or partial, that was scanned).
3. If purchasing a gift card from a local retailer that offers a very basic proof of record where the gift card has no identifying information (e.g. a piece of paper, a plastic card with no barcode, a basic receipt, etc.), take a picture of the gift card and, if they are willing to accept it, give them your name and contact information.

For all types of gift cards, digital or physical, email, home delivery or in-store pickup/delivery:

1. Immediately check the balance of the card (online or on the phone). Sometimes, even if everything seems ok before and after the purchase, the card may fail to properly activate at the tender at the time of purchase.
2. Try your best to use gift cards as soon as you can after you buy/receive them. Besides the threat of a hack or criminals duplicating cards, a lot of gift cards have a pattern to their barcode number that can be guessed pretty easily if a criminal determine a pattern (e.g. the first 10 digits of gift cards to a certain store may be the same, while only the last 4-6 digits differ from card to card). A little bit of computer programming knowledge to brute force the number is all a criminal needs. See this Wired story from 2017.)
   1. For store-branded gift card that can be redeemed into your account (and thus be marked as “used”) there is no reason you shouldn’t do this immediately after purchase, e.g. Apple, Amazon, Google Play, Netflix. (Be aware: for sites that allow you to just add the gift card as a form of payment, like Walmart, the card will not be marked as used/redeemed. It can still be stolen).
      1. The process with Target involves using the gift card combine option after adding the cards to your account. It will create a combined gift card balance while marking cards as used/redeemed.
   2. If you are buying VISA/MC/AMEX card(s) with the intent of either buying other store-branded gift cards, paying utilities bills or paying the PayPal fee to convert it to cash, do it immediately. There is no reason to have that cash sitting as VISA/MC/AMEX card as it is not gaining interest. (Prepaying utilities is better than losing that cash value to fraud)
3. For stores that let you redeem gift cards to your account for later use (e.g. Amazon, Target, Walmart, Apple, Google Play), turn on 2-factor authentication to prevent hackers from getting into your account and using the balance.
4. If you haven’t already immediately spent your VISA/MC/AMEX, or don’t plan to immediately spend them, register the card(s) with their respective online portals. This will associate a name and address with the card which should reduce the possibility of online fraud.
5. While gift cards are treated as cash by stores, you should treat them as you would a credit card with respect to checking purchase history. Check them regularly. Recourse/assistance for fraudulent charges is only available to you if the charges are under 60 days of age, by either the card issuer or the merchant. If the charges are beyond 120 days (the limit for escalating the case), you are out of luck.

General tips

1. If buying multiple gift cards of the same value, make sure to contact your bank to avoid getting your credit card locked for fraud.
2. You should know your rights as a gift card consumer:
   1. Per federal law, gift cards cannot expire for 5 years from the date of activation.
   2. Per federal law, the card issuer cannot charge dormancy or inactivity fees unless there has been no activity for a year and the card clearly states such a policy towards that fee.
   3. Some states have special statutes and laws related to gift cards. See here: https://www.ncsl.org/financial-services/gift-cards-and-gift-certificates-statutes-and-legislation. E.g. Colorado allows gift cards to be redeemed for cash from the merchant if the card value is under $5.
3. When checking the card balance, always refer to the back of the card and only use the phone and/or website provided – it is always there. NEVER search Google for the information to check a specific store’s balance. Google is full of scam results that provide false balance-check websites or incorrect phone numbers to steal your gift card. Stores have excellent fraud units and can see who and how a card was used. If they determine the funds were stolen as a result of the user entering their card info to a scam website, they will offer you no recourse (e.g. Target).
4. It is always worth contacting gift card support about combining gift cards. Shell supports this – just email them pictures of the cards and they will combine them (up to the max value stated on the face of the card, e.g. $50).
5. If your gift card is empty, just throw it away. Most merchants (e.g. Target) will not reload old cards, regardless if you request to add new funds or are getting a refund from a return. They will issue you a new card.
6. Usage of fast food gift cards at airports or highway rest stops are hit or miss (more miss than hit). Plan accordingly.
7. Usage of gift cards internationally (even if the brand is international) is generally not possible.
8. Currently, Home Depot is the only store to require a driver’s license/ID when issuing a gift card as store credit (it doesn’t apply to customer-purchased gift cards). They associate the card with your ID, which is required at the tender (both at assisted check-out and self-checkout). This is done to prevent resale and fraud. It is safe to assume that this will be the future of store credit for many stores going forward.
9. Some stores will not allow usage of gift cards and vouchers/credit on a single purchase, or at least they don’t make it easy. Delta is one example – a purchase using both a travel e-credit and a gift card cannot be completed online or via SMS (you can only select one or the other). It can only be done via the phone.
10. Gift cards are treated as cash by stores. This is particularly useful at gas stations which offer different prices for cash and credit – a gift card should trigger the cash price at the tender.
11. Some stores limit the number of gift cards you can redeem in a single purchase, although this is generally only related to online purchases. Best Buy, for example, has a hard limit of 10 for online purchases. You should contact the store before attempting to use multiple gift cards.
12. For VISA/MC/AMEX gift cards, be mindful that some stores do a temporary authorization charge before charging the actual amount. While VISA/MC/AMEX will see this as a temporary authorization charge the card will be drained of that temporary amount for two days before it is fully refunded. This could range from as little as $0.10 to as much as $1.00. This will affect your ability to make a planned purchase (e.g. if you have a $25 prepaid card and a store does a $0.10 temporary authorization charge, your buying power is $24.90 until that $0.10 is refunded).
13. Some stores offer deals when using the credit card, e.g. Target every-day 5% discount, Lowes every-day 5% discount, Old Navy 30/40/50% off. These deals are only available if you make the purchase with the credit card. The deal does not apply to value purchased with gift cards (although in the case of Old Navy, the credit card just needs present on the purchase to enable the full-purchase discount).
14. The IRS, the police, your local sheriff, or anyone of authority will never directly ask for payment. They most certainly will never ask for payment in the form of gift cards. If you ever owe something to someone, be it a business, a government entity or authority figure, you will always be contacted by post mail, as required by law.
15. Never provide gift card information over the phone or by email if you are asked unsolicited.
16. If you receive an email from a friend asking for help buying a gift card, check the headers of the email to see if there are additional emails present. Even if hackers fail to find anything of value in the victim’s inbox, the hacker may contact people in the victim’s contacts list trying to acquire gift cards fraudulently. They may also leave a footprint under the assumption that they eventually lose access to the victim’s account, for example setting up sending rules so as to allow replies be sent to their own private email.

If you decide you want to sell a gift card:

1. Use a legitimate app or website, like Raise.com. They charge a fee, yes, but it reduces the chances of getting scammed.
2. If you decide to sell a gift card via a marketplace app (e.g. Facebook, Craigslist, OfferUp, etc.), be aware of the balance check scam. A scammer will contact you with interest on buying the card and demand verification of the balance so as to avoid getting scammed by you, the seller. The scammer will request to do a three-way conference call with the phone system they claim to be legit, but is in reality is a friend of the scammer waiting to record your phone key taps to decode the card numbers.