Experts warn of scams involving prepaid gift cards

Americans lost nearly $3 million in gift card scams in 2020, officials say

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Gift cards are one of the most popular gifts, and they’re now becoming one of the most popular ways scam artists are scheming people out of their money.

“If it sounds too good to be true, hang up,” said Charlies Horvath of River Rouge.

Horvath reached out to the Better Business Bureau after someone called him claiming he could cut his cable bill in half. The caller said all he had to do was buy $480 in eBay gift cards.

Horvath felt something wasn’t right and instead of buying the gift cards, he called his daughter.

“She called me back and she said, ‘Dad, don’t you dare. You’re being scammed,’” Horvath said.

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Laura Blankenship, director of marketing for the Better Business Bureau serving Eastern Michigan the Upper Peninsula, said they receive many scams throughout the year and one common denominator they see is the way that they’re carried out by prepaid gift cards.

Prepaid gift cards are being requested in several different types of scams, including government employee impersonation scams, secret shopper scams and puppy scams.

The Better Business Bureau scam tracker showed that Americans lost nearly $3 million involving payments with prepaid gift cards in 2020.

“Whenever you purchase a prepaid gift card, unfortunately it’s just like cash, you can’t get that money back,” Blankenship said.

The Federal Trade Commission says one in four people who lost money to fraud paid with a gift card.

BBB reports in its study that scam artists often tell people to go to a nearby store to purchase the gift cards and will often stay on the phone with them the entire time.

Blankenship also said scammers will go in stores and grab the numbers off the back of gift cards that are yet to be purchased. They check each day to see when money goes onto the cards. Once they’re activated, they steal that money before the person has a chance to spend it themselves.

It’s important to always check the back of a gift card before you buy it in the store to make sure no one has tampered with it.

Click here for more information on prepaid gift card scams.

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About the Author:

Hank Winchester is Local 4's Consumer Investigative Reporter and the head of WDIV's "Help Me Hank" Consumer Unit. He works to solve consumer complaints, reveal important recalls and track down thieves who have ripped off metro Detroiters.