Every year, scammers trick millions of Americans into handing over hundreds of millions of dollars in gift card payments.

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Ian Sherr Nov. 24, 2021 11:49 a.m. PT

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Gift cards have become a popular way for scammers to launder money. CNET

The scams always start out innocently enough.

Maybe a phone call. From someone who says he works for Amazon, claiming he noticed someone hacked into your account. Maybe someone who says she works for Microsoft, offering a refund for a computer security service you bought a few years ago that stopped working.

Lisa Hernandez was trying to reach Match.com, the dating site, to cancel her account when it happened to her. The 50-year-old single mother of four had signed up for the service but decided she didn’t want to stay with it.

She searched on Google for a customer service number to call. What she found instead was a fake website, built to look legitimate but with a phone number that connected her to a scammer posing as Match customer service. Kevin, the man on the other end of the line, said he could help. First, though, he told her she needed to install a program called TeamViewer, which allowed him remote control of her computer.

He then directed Hernandez to log into her bank’s website. “We’re going to directly refund you your money,” he promised and asked her to fill out a computer-generated form for her refund of $93. Instead, Kevin set his scam in motion by manipulating the code on her computer to make it look like he had deposited $9,000 into her bank account instead, effectively doubling her savings.

The only way to fix the mistake, he told her, was to buy gift cards with the extra money she’d received and give him the numbers. Then he could put the money back into Match’s bank accounts and all would be settled. “I need you to go to the store to get Target cards,” she remembers him saying. Otherwise, he’d lose his job. She did as he asked, giving him nearly $9,000 worth of gift cards.

Moments just like this happen to tens of millions of Americans every year. While it’s easy to assume most victims are elderly, surveys suggest it’s much broader. Victims are old and young, rich and poor. Some people get scammed multiple times. Some victims have family members who fight fraud for a living. It’s struck my family. Likely, it’s happened to yours, too.https://playlist.megaphone.fm/?e=RED3469524001

When you think of computer crimes, identity theft usually comes first to mind. That’s because it cost Americans a staggering $56 billion last year, according to Javelin Strategy and Research. But it tends to feel more like an inconvenience than theft, because you usually get your money back thanks to a nearly half-century-old law designed to protect consumers from any “unauthorized” credit charges. The fees we pay help cover the losses to that fraud. But it’s different with gift cards — they have no such legal protections. When a victim shares the card number with a scammer, they’ve effectively authorized its use. Even identity fraud insurance, which would cover ID theft in the case of a data breach, often doesn’t apply when you’ve given the information willingly.

“If someone coerces you, then you’re out of luck,” said Kathy Stokes, director of fraud prevention programs at AARP.

It’s impossible to fathom how much money these scammers have taken. Many victims don’t report the crime to authorities, often because they’re embarrassed and quickly learn the hard truth that they’re unlikely to get their money back. So when the Federal Trade Commission counted more than $245 million in money lost to gift card scams since 2018, most experts said the actual number is likely many multiples worse than that.

“This is only the tip of the iceberg,” said John Breyault, vice president for public policy, telecommunications and fraud at the National Consumers League.

The anecdotal data suggests he’s right. The FBI’s Internet Crime Complaint Center, for example, said it receives more than 2,000 complaints each day about all sorts of internet scams, from fraudulent business impersonation to fake romances to gift card scams. All told, the FBI tallied $4.2 billion in fraud losses reported by victims last year.

Some stores put up signs next to gift card racks and checkout counters warning about fraud. Others say they’re training employees to spot potential victims. But they aren’t doing much else. “The business incentive in the gift card space is for these cards to be used with as little friction as possible,” Breyault said. “They don’t want to get into the way of someone buying a gift card and buying a Coke on the way out.”

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