One of the most common scams that preys upon older adults is the gift card scam, yet it is a very easy one to avoid.
What is the scam? In short, an unscrupulous thief will contact an individual and use a variety of tricks to convince that person that there is an emergency. It may be something as austere as saying a grandchild has been kidnapped or arrested or it may be more genial, like needing a last minute gift for a relative.
The scammers do their research. They’ll head to social media to find the names of family members or friends to make it all sound very legit. Being able to add a name into the message makes it all the more convincing: “Hi grandma. This is Johnny on a new phone.”
Whether the scammer tries to convince the target that there is a major emergency or just going with something lighter like needing help purchasing a gift, the criminal will claim that the best way to get things done is for the victim to head to a chain retail store (somewhere like WalMart, Target, or Best Buy), purchase a gift card, and send a photo of the card, along with the pin code that is scratched to reveal on the back, so that they can make sure it looks right.
Moments later, the scammer has used that card for an online purchase and there is no way to recover the money spent.
When you first think about the gift card scam, it doesn’t really sound that scary. How much could someone possibly lose purchasing gift cards? $50? $200? Nothing life changing…right?
Think again.
A Real Gift Card Scam Story
This photo from a real life situation tells the story far too well.
Shown in the image above is $69,500 worth of gift cards purchased in just 5 (five!) days by an 81 year old woman in St. Louis in early 2022.
As the story goes, the scammers impersonated the woman’s bank, claiming to be from the fraud department. They proceeded to tell her that the account had been hacked and the she needed to protect her money through an inscription process that involved purchasing $500 gift cards from local retailers.
The scammers started with her checking account – around $5,500 – and then moved onto credit cards as she happened to have one with an advertised “unlimited spending limit”.
Within just 5 days, she was nearly $70,000 in the hole and is continuing to climb her way out with the help of her son who is having a hard time getting any action from the credit card companies.
Again, this sounds a bit like one of those stories that would never happen to you or your parents, but in the first nine months of 2021 alone, nearly 40,000 people reported $148 million stolen using gift cards.
And, according to a study led by AARP, 34% of US adults have been targeted for a gift card scam and of those targeted, nearly a quarter of them have followed through with the purchase.
How Can the Gift Card Scam Be Avoided?
Easy enough: Knowledge is power.
Inform your parents about this scam and let them know that neither you, nor any of their relatives, would ever ask them to purchase a gift card. Let them know that if they get a call or a text message, as serious as the problem seems or as believable the message sounds, if someone asks them to purchase a gift card, they should contact you immediately before heading to the store.
Outside of knowledge, there is also power in numbers.
While banks send spending alerts from time to time, those alerts only go to the bank or credit card account holder and that person is already caught up in the scam.
An app like WayWiser allows those helping care for the older adult monitor their finances as well, putting a circle of protection around the individual who is at risk. Even more so, WayWiser allows users to set specific alerts that are different from what the large, commercial banks and credit unions activate.
Alerts within WayWiser can be set specifically for things like any spend over a certain dollar threshold. While a bank might not care about a $500 gift card, WayWiser would let you know that mom or dad made a large purchase. If it’s nothing important, you can ignore it. If it is suspicious, you can get in the middle and stop things before it his $70,000 in losses.
