Retailers fight gift card scams
State Attorney General Josh Shapiro announced this week that three national retailers have agreed to make major changes to their gift card policies to prevent gift card scams that target consumers.
After more than a year of collaboration with the attorney general’s Bureau of Consumer Protection and New York Attorney General Barbara Underwood’s Bureau of Consumer Frauds & Protection, retailers Walmart, Target and Best Buy have agreed to change their policies to prevent gift cards sold in their stores from being used for payment by victims of scams.
“This level of change in corporate behavior usually requires years of investigations and, sometimes, litigation,” Shapiro said. “Here, we were able to work constructively with retailers to address the issue and protect consumers from scams.”
Gift card scams have been on the rise in recent years. The Federal Trade Commission recently found that 26 percent of scam victims paid with a gift card between January and September, compared with only 7 percent in 2015, resulting in a 270 percent increase.
Three of the most common gift card scams are:
Grandparent scams in which a scammer impersonates a grandchild of a victim who claims to have been arrested and needs bail money or a lawyer to be paid in the form of retail gift cards.
IRS scams in which a scammer impersonates someone from the Internal Revenue Service who is attempting to collect taxes owed, and threatens arrest if the debt is not paid immediately via gift cards.
Technical support scams in which a scammer impersonates a technical support employee claiming to work for the manufacturer of the victim’s computer, tells the victim that there is a virus, requests remote access to the victim’s computer, demands payment for the services and refuses to unlock the computer until the victim pays.
During the various scams, the scammer demands payment in the form of high-value gift cards and instructs the victim to read the numbers on the back of the gift cards over the phone.
The scammer often uses the gift cards to purchase third-party gift cards, such as iTunes, Steam or Google Play, making it unlikely that the victim will be able to get any money back. Once a consumer falls victim to the scheme, the scammer often continues to call them to demand more money in gift cards.
According to Shapiro’s office, one Pennsylvania resident lost $31,000 as the result of a grandparent scam, while another was swindled out of $28,000.
The Bureau of Consumer Protection contacted Walmart, Target and Best Buy after receiving numerous complaints about gift card scams to discuss changes that retailers could make to protect consumers.
Some of the changes that will be undertaken by the retailers include reducing the monetary limit that can be placed on individual gift cards and the total amount that can be loaded onto cards during the same transaction, placing restrictions on the use of retail gift cards for third-party cards and enhancing employee training to identify the warning signs of gift card scams.
“We care about our customers and are continuously working to further enhance our gift card program to help guard against these types of crimes,” said Jason Klipa, director of public affairs for Walmart.
According to Shapiro’s office, consumers should be aware of the following in regard to gift card use:
A person cannot pay bail, a lawyer, the IRS or technical support using retail gift cards.
Gift card numbers should never be given to persons whom the consumer doesn’t know.
The IRS will establish first contact through official mail, not a phone call out of the blue.
Consumers who are the victims of scams should submit a complaint to the Bureau of Consumer Protection by calling 1-800-441-2555, emailing scams@attorneygeneral.gov or visiting www.attorneygeneral.gov/submit-a-complaint/scams-complaint/.
