Blog

Gift card scammers cost Louisianians $3.7M in fake debt collection

Published November 6th, 2018 by Salesadmin

By Louisianna Weekly - This month, the FTC released data showing that consumer fraud involving gift cards has increased dramatically in 2018. These types of scams have cost consumers more than $53 million in the first three quarters of this year, more than double the $20 million reported stolen in 2015.

“This is a growing problem that we are seeing more and more often,” said Monica Vaca, associate director with the Division of Consumer Response and Operations at the FTC. “Scammers are able to remain completely anonymous and get cash from these cards almost instantly.”

In a typical scam, victims receive an email or phone call demanding money. Most often, scammers pretend to be a loved one or a government agency, asking for money to repay debt, or bail someone out of jail. Scenarios vary, but all scams ask the victims to pay them as soon as possible, or face consequences.

“They tell you that they need money immediately, and that how you’re going to pay is by going to the nearest large retail outlet and buying gift cards,” Vaca says. “Most often they ask for iTunes or Google Play cards, but it varies. Once you have the cards, they ask you to scratch off the protective coating on the back and read the card pin numbers to them. Once they have those numbers, they can access the cash almost immediately.”

In response to this increase in gift card fraud, the FTC is partnering with state, federal and international authorities to prosecute scammers as well as working to educate the public on how to avoid scams.

“We want to really underscore that no legitimate merchant will ever ask you to pay by a gift card,” said Lois Greisman, associate director with the Division of Marketing Practices at the FTC. “A utility company or the IRS is never going to ask for payment that way. If you do get a call asking you to pay someone with a gift card, we ask that you report it to the FTC.”

In addition to a public information campaign, the FTC is working with law enforcement as well as gift card issuers. “More than half of the telemarketing happening in the United States comes from companies based in India,” Greisman said, “So, we have been working with authorities there to crack down on some operations. At the same time, we are communicating with card issuers to try and prevent these cards from becoming fraud instruments. We encourage consumers to contact these companies if they have been a victim of fraud, because they need to hear directly that it’s happening.”

Part of the reason for an increase in the use of gift cards as a fraud instrument is the FTC’s crackdown on other prime fraud targets – wire transfers and credit cards.

“We see that if you squeeze one instrument and bring visibility to that area, fraudsters turn to other methods to meet their needs,” Greisman said.

The FTC also found in a 2013 survey that immigrants and people of color are more likely to be victims of fraud, and are also less likely to report what has happened.

“We are aware that there is a disparity in terms of reporting,” Greisman said.

In Louisiana, there have been more than 3,000 fraud reports in the third quarter of 2018 alone, totaling more than $3.7 million in losses. The most common methods of fraud were imposter scams and fake debt collection, with more than 1,000 reported cases of each.

“If someone calls you and says you 

have to pay, stop and take a breath,” Vaca said. “Think to yourself – ‘Does this make sense?’ Talk to a trusted friend or family member. If you can, immediately hang up the phone. If you don’t and you are a victim of fraud, know that you are not alone. Call the gift card issuer, and call the FTC, and tell them what you’ve experienced. We advise everyone to remember that gift cards are solely for gifts, and not for payments.”


‹ Back

Comments ()