Fear of empty shelves, coupled with hope for a quick holiday hack, will drive shoppers to grab bunches of gift cards in the next few weeks.
While gift cards might be simple to buy, though, there are plenty of gotchas to consider along the way and yes, warnings about crime rings running scams.
Like, what happens if the money isn't actually on the card when you try to buy something with it? About 21% of consumers reported that they have given or received a gift card with no money on it, according to an AARP survey of adult consumers.
Sure, some flaky friend could have just given you a gift card that she forgot she used up a year ago.
Or the card might not have been activated properly by the retailer.
Or you might have ended up the victim of a scam.
How some gift cards have no money
Sophisticated scam rings know how to quickly wipe a gift card clean — and gain access to that cash — shortly after the card is purchased by a shopper and activated, according to Kathy Stokes, director of fraud protection for the AARP.
Gift cards can be tampered with at the store, she said, by crooks who grab stacks of cards, remove the security tape from each gift card, and then take photos or write down the card's secret 16-digit activation code.
Many times, the cards don't look like they've been tampered with because new security tape is placed on them. But consumers are warned nonetheless to be on the lookout for signs that someone damaged the card's packaging.
The bad actors, Stokes said, are able to use technology to monitor when the compromised cards are activated. Soon after money is loaded onto the card, the scammers will the use the activation code to steal the money.
"As soon as that card hits the cash register, they're pinged," Stokes said.
The value of the card can end up being drained by an outsider, without ever leaving your hands.
Gift card fraud is real
Crooks steal money from gift cards in two ways. One, you could unknowingly be a victim when you buy a compromised card.
Two, scammers often impersonate big name companies or federal agencies as they target their victims. The con artists give you some elaborate song and dance, say frightening you into thinking that you didn't pay your taxes, to drive you to put your money on gift cards to solve some looming problem.
About one in four people who report losing money to fraud, according to the Federal Trade Commission, say it happened when a scammer tricked them into giving the numbers on the back of a gift card.
During the first nine months of this year, nearly 40,000 consumers reported losing what adds up to $148 million in scams where gift cards were used, according to new report by the Federal Trade Commission.
That's more than all of last year when $125.3 million was lost in scams that involved gift card payments.
The FTC pointed out that the majority of frauds are not reported to the government so the numbers reported likely only reflect a fraction of the harm caused.
Oddly enough, Target is a big name that's popping up. The FTC noted that scammers are increasingly demanding Target gift cards, which proved to be the most popular choice based on reports received by the FTC during the first nine months of this year.
"Target gift cards accounted for about $35 million in payments to scammers," the FTC said, "more than twice as much as any other brand of gift cards."
The median amount lost when consumers paid with Target gift cards was $2,500. And 30% of people who paid with a Target card said they lost $5,000 or more.
Target said in a statement that it has increased in-store signage to warn customers of common gift card scams and educated employees to keep an "eye out for potentially distressed guests buying gift cards and intervene as needed."
"We also continue to implement new technology to prevent gift cards from being abused by fraudsters," Target said in a statement.
According to the FTC, scammers are demanding specific gift cards: Target, Google Play gift cards, followed by Apple, eBay, and Walmart cards.
Scammers often direct their victims to specific stores to buy the gift cards: Target, Walmart, Best Buy, CVS and Walgreens.
Any time — really, any time — someone demands that you pay for something with a gift card, Stokes said, you can be 100% certain that it's a scam.
The FTC states simply: "Gift cards are for gifts, not for payments."
What are some ongoing scams?
The Better Business Bureau Serving Eastern Michigan said it has received complaints from one consumer who was contacted and told they won a sweepstakes and all they had to do was purchase four gift cards and send them to pay the processing fee.
Another consumer was searching for a new job but then was asked to purchase a gift card to pay for office supplies.
Scammers also pretend to be from Social Security and warn about a problem and then request gift cards to fix the issue. Or they might demand gift cards if pretending to be from a utility company and threaten to shut off your heat or electricity.
Even during the holiday season, the IRS issued an alert about scammers who are targeting taxpayers by asking them to pay a fake tax bill with gift cards.
Watch those emails from friends and relatives, too
The IRS warned that scammers "may also use a compromised email account to send emails requesting gift card purchases for friends, family or co-workers. Gift cards make great presents for loved ones, but they cannot be used to pay taxes."
Early in November, I received one phishing email from scammers, designed to look like it was from a former co-worker, saying: "I Hope this email finds you well, Do you order stuff online on amazon or have an account with Amazon?"
I didn't respond but alerted my friend. Someone else who responded reported later that the second email asked for just $300 via an E-Code Amazon gift card for a niece who has a birthday but is dealing with cancer. Somehow, the so-called friend would repay the money but needed that card now because her own account wasn't working. Yeah, right. Of course, you'd email the E-code to the niece — who is the scammer.
Some gift card tips include:
—Inspect gift cards before you buy them and look for signs of where the packaging might have been compromised. "Take any suspicious cards to the cashier and buy a different card," according to a consumer alert from the Michigan Attorney General.
—Report any fraud as soon as you discover it by filing a complaint with the Michigan Attorney General and the Federal Trade Commission. Report scams to the FTC at ReportFraud.ftc.gov. Also see www.consumerresources.org for how to file a complaint with your attorney general or see www.michigan.gov/ag.
—When you buy a gift card, get an activation receipt and keep it.
—Consider uploading gift cards onto the retailer's app as soon as possible after receiving the card. "Once uploaded, you can cut up the physical card so no one else can use the funds before you do," according to a Target alert.
—Be careful if you're trying to sell an unwanted gift card. In one scam, the so-called potential buyer asks to listen in when you call to confirm the balance of the gift card that you're selling. "If you allow it, the fake buyer will record the touch tone numbers and use the gift card number without paying you for it," according to the Michigan Attorney General.
—Be wary of using websites that offer to check your gift card's balance. According to BBB.org/ScamTracker reports, some websites that claim to check your gift card balance are really a way to steal money off your card. "These sites ask for your card's ID number and PIN or security code. Then, scammers use the information to drain the money off your card."
—Experts say it's best not to let gift cards sit unused. Some cards note on the front that they do not expire. But others might expire after five years from the date of purchase. State laws can vary, too.
—Gift cards given as part of a promotion might have different rules, so pay attention to any restrictions.
—Consider the possibility that a store or restaurant could go out of business or just close its outlets in your area. It's another reason to limit how much money you put on gift cards — and why it makes sense to use the cards quickly after buying them or receiving them.