Beware of gift card scammers that can drain serious money

The holidays are nearly here and with all the joy and fun they bring, it’s also an important time to watch out for scams. The latest one this season involves gift cards, which are a hot commodity when it comes to gift-giving.

Not only do gift cards make it easier to give gifts, but deep down, pretty much everyone would rather have one than something they have to return—even if it doesn’t come in a big box with fancy wrapping paper.

But while they’re loved by many of us this time of year, they’re also loved by scammers who have now found a way to take money from a gift card before you or your loved one even receives it.

According to Consumer Reports, the gift card scam is pretty easy for scammers to pull off. First, they take a card off the rack at the store, write down the gift card number and scratch the strip off the back of the card to get the security codes. They then replace the strip and when you load a card with money, they’ll get an alert telling them the card has been activated.

Crooks can also hack websites where consumers access gift card balances, though that is more of an advanced scam than simply using a card at a store.

“The crooks can see as soon as someone activates the card, because they’ve automated all this with software that periodically checks the card balance via the internet,” David Farquhar, a unit chief within the FBI’s Criminal Investigative Division, told Consumer Reports.

Luckily, gift card issuers are aware of the scam, so they’re stepping up security, but you can also protect yourself with these tips from Consumer Reports:

• Buy gift cards online directly from the retailer, not a third party site. Also, be sure you have security software on your computer.
• Buy gift cards behind the counter or in well-sealed packaging.
• Change the security code on the card once you buy it if possible. Just be sure to tell the recipient if you’re giving the card as a gift.
• If you are the victim of a gift card scam, call the retailer to see if they can reimburse you.

Other Gift Card Scams

There are also other gift card scams you should be aware of, especially this time of year. The biggest one is the ‘Hey Grandma’ scam, where scammers pose as a grandchild or loved one and ask an elderly person to load money to a gift card.

And as tempting as it may be, your odds of winning hundreds of dollars worth of gift cards—like this $250 gift card scam involving Walmart—are pretty low, so don’t fall for anything that seems too good to be true.