Watch for Warning Signs before You Buy
As shopping days dwindle, gift cards become a very attractive and easy option. You can buy them physically or virtually, email them and print them or send them through Facebook. There’s no doubt gift cards are popular with holiday shoppers and gift receivers as well. An estimated $27 billion will be spent according to the National Retail Federation on cards that will stack up satisfaction this holiday shopping season. The Better Business Bureau warns shoppers this particular gift can also be a gift for scammers too, so before you buy one, there are some important warning signs to watch out for.
Consider that while you’re reviewing the plethora of gift card options in a store rack, a thief is snapping pictures with their cell phone or writing down the unique identifying numbers or may even use an electronic scanner when no one is looking to lift information from gift card magnetic strips. Now armed with data – the crooks head to their computers and wait for customers to buy the cards they have already stolen data from. Thieves comb websites that display the balances and once the data from the stolen strip appears activated - they spend, spend, spend.
Shoppers may have a gift card to wrap, but when their recipient heads out to use it, there’s no value since the thief has already spent the balance. “Honest consumers would find it hard to believe that crooks use the gift card system like this and in other ways, but unfortunately it’s true,” said David Polino, Better Business Bureau President. “Who you buy from and where you buy the gift cards themselves will make all the difference.” Since eight in ten Americans will buy a gift card this holiday season and several will buy them in non-traditional ways using online stores, mobile shop or use e-gift services, the BBB advises consumers to beware.
Thieves are not only going to the rack, but have other schemes to scam hard working consumers out of their gift expectations. They may buy used and fraudulent gift cards to sell on auction websites. Experts for the gift card industry claim it’s not uncommon for sellers to overstate the value of real gift cards sold on auction websites, leaving buyers with less on their cards than they actually purchased. Scammers also use stolen credit cards to buy gift cards and then sell these gift cards for cash at online auction sites or elsewhere making it difficult for you to know who you’re actually buying from regardless of their satisfaction rating on these sites.
The one-size-fits-all present can also carry fees that could leave a dent in their worth. “While there are more consumer protections than in years past, buyers and receivers need to know how to protect the value of their gift cards,” added Polino.
The BBB offers the following tips for gift card shoppers to buy them without issue this holiday season:
Avoid Untrustworthy Online Auction Sites. Not all sites are created equal and the money you expect to save may not be worth the risks. BBB recommends shoppers research online resellers first at bbb.org and check into the terms and conditions before they buy to ensure there’s help should something go wrong after a purchase.
Shop with Trust. Regardless of where you buy from, BBB advises consumers to know and trust the retailer they’re buying their gift cards from. Whether you’re online or in a grocery store, pharmacy, bank or specific retailer, it’s important to know the gift card policies beforehand. View their BBB Business Review for information or other sources before you give them your financial information. If you buy a gift card online, make sure you buy it from the same business where you plan to use it.
Buy from Behind. Gift cards publicly displayed leave room for tampering and data stealing. BBB recommends consumers shop from retailers who store their cards behind a counter or to request one that has not been out on the floor. Make sure you inspect the packaging and have reassurance from the management about store employees who also need to have your trust.
Load in Front. Ask your store cashier to scan the gift card in front of you for the amount you’ll be paying. You will have peace of mind that the total you want for your gift will be on the card you actually buy.
Watch out for Fees. The Credit CARD Act of 2009 that reformed credit card practices changed the worst fee attributes of gift cards: inactivity fees and expiration dates. Cards can not expire before 5 years from the date of purchase or when money was last loaded onto a card. Inactivity fees are prohibited for the first 13 months in New York State. But there’s a but… not all cards are equal since some still have fees affiliated with them. Cards from banks, malls and credit cards are more likely to add fees for activation, maintenance, and transactions.
There are primarily two types of cards and your choice will affect how they can be used and the amount of fees charged.
- Retail gift cards (closed loop) are sold by retailers, gas stations and restaurants, and can be used only with those merchants.
- Bank gift cards (open loop) can be used wherever you like as long as they carry the logo of a payment card network such as American Express, Discover, MasterCard or Visa. Some bank-issued gift cards charge a fee for checking the balance.
Keep your Receipt. Consumers might expect a retailer to accept a return even if they don’t have a receipt - but in many cases it’s not so. Not only do receipts help you with easy returns but when you have one for your gift card it provides proof of the amount you purchased. Many retailers are able to track where the gift card was purchased, activated and used. If the card is lost or stolen, some retailers will replace the card for you if you have your receipt.
Protect Your Information. When you buy a gift card online, it’s not only important to shop with a business you trust, but to keep your personal information personal. BBB reminds consumers to never share their Social Security number at the time of any purchase. And to take advantage of registering your gift card with store online if possible. Not all stores offer this option, but you can uncover misuse of your gift card sooner and report it more quickly.
Use them as Cash …and Quickly. Retail experts estimate that 25% of all gift cards go unused each year. Lost or forgotten gift cards represent free money for stores; about an $8 billion gift for the retail industry each year.