Buying gift cards this holiday season? Get ready for some new rules.
Big retailers Walmart, Target and Best Buy have all made drastic changes to their gift card programs in an attempt to curb fraud this year.
Reuters was first to report the changes, which were announced this week by two attorneys general from New York and Pennsylvania. The new rules include restrictions on capping how much money can be loaded onto gift cards, purchase limits on single transactions, and prohibiting users from buying store-branded gift cards for other gift cards.
Barbara Underwood of New York and Josh Shapiro from Pennsylvania said the changes were part of a more than year-long initiative to stop scam artists from using retail gift cards to buy third-party cards such as iTunes, Steam and Google Play that can be resold on the black market.
Additionally, cards were also being used to impersonate other people to swindle victims. One common impersonation used by scammers is to pretend to be an Internal Revenue Service agent who is seeking money for unpaid taxes.
Both Underwood and Shapiro warned customers that retail gift cards cannot be used for these purposes and that the IRS does not cold-call people.
In addition policy changes, the retailers have also bolstered employee training on spotting scams quicker to alleviate problems before it happens.
In October, the Federal Trade Commission released data saying that gift card scams have increased 270 percent from 2015 and that con artists typically favor using them because they can get quick cash, the transaction is largely irreversible and they can remain anonymous.
“People report that con artists direct them to buy gift cards or reload cards at well-known stores like Walmart, Target, Walgreens, and CVS. According to these reports, they demand some specific card brands. While these change over time, iTunes cards have been the top card brand by a wide margin since 2016. By contrast, Google Play cards were not reported in significant numbers until this year,” the FTC said.
What’s more, losses through September from gift and “reload” cards totaled $53 million, up from $40 million for all of 2017, with a median loss of about $500 per incident.
Walmart, Target or Best Buy did not immediately respond to FOX Business’ request for comment.
Here are three of the most common gift card scams.
- Grandparent Scam – The scammer impersonates a grandchild of the victim who claims to have been arrested and in need of money to pay for bail or a lawyer, paid in the form of retail gift cards. Victims report that the scheme was believable because the scammer knew the name of and sounded like the victim’s grandchild.
- IRS Scam – The scammer impersonates someone from the IRS attempting the collect taxes owed. The scammer usually threatens arrest that day if the debt is not paid immediately via gift cards. Again, victims report that the scheme is believable because the scammer may give the name and badge number of a real IRS agent whose identity can be verified online, may know detailed information about the victim’s tax history, or may send the victim an email that appears to be from an IRS domain.
- Tech Support Scam – The scammer impersonates a tech support employee claiming to work for the manufacturer of the victim’s computer. The scammer claims there is a virus and requests remote access to the victim’s computer. After the scammer “fixes” a non-existent problem, he or she demands payment for the services and refuses to unlock the computer until the victim pays.