Gift cards are for giving gifts, not for paying ‘bills’ to scammers

NEW YORK—Gift cards are popular among Filipino Americans because they are convenient, accessible, and easy to use. By the same token, according to the Federal Trade Commission (FTC), scammers also like to use them to swindle Americans out of millions of dollars.

FTC officials said they have recently seen a significant uptick in scammers demanding to be paid by gift card. It is a quick, untraceable method for fraudsters to steal money from their victims.

“Gift cards are for gifts—not payment to the IRS or your electric bill,” Monica Vaca, associate director of FTC’s Division of Consumer Response and Operations, said last Tuesday at a telephonic briefing conducted by the FTC and Ethnic Media Services.

Vaca explained that scammers pretend to be someone from the IRS or that your family member needs help so you need to put money on a gift card. But as soon as you read the numbers off the back of the gift card to the scammer, the money is likely gone for good.

Checks in the mail

A Filipino woman, who only identified herself as Jacline, shared her experiencewith a gift card scam on an FTC webpage.

A few months ago, she said that she received a check in the mail. She was instructed to deposit the check into her personal account and then send a portion of the money through a prepaid gift card.

“I cashed out the check and then I sent the [gift card code through an email address] that they [had] provided me,” said Jacline, who just moved to the United States a year ago. “After I sent the gift card information [to the scammers], they sent me another check. I cashed out about $9,000.”

But when her bank discovered the checks that she deposited were counterfeit—which took several days before the checks got cleared—the scammers already got her money.

“I made a big mistake,” Jacline said. “Now I had lost a lot of money, and I don’t know where to report to get my money back.”

Popular gift cards scammers use

The popular gift cards that con artists use, the FTC says, include iTunes or other name brand cards. Scammers tell people to go to well-known retail stores like Walmart or CVS to buy these gift cards. Scammers sometimes demand victims use reload cards like MoneyPak, ReloadIt and Vanilla.

“They [scammers] convince you to get that money immediately,” Vaca said. “Everything is designed with a sense of urgency.”

Americans lost $905 million

According to the latest FTC Consumer Sentinel Network Reports, Americans lost $905 million to fraud in 2017. The average amount of loss is $429 per person.

Nearly 2.7 million consumer reports were filed with the FTC last year, the report said. Of that number, about 1.1 million reports were related to consumer fraud.

With the use of advanced technology, scammers utilize various list generators to obtain access to millions of Americans’ phone numbers, email, and mailing addresses.

The top three consumer problems reported last year, the report found, were debt collection (23 percent), identity theft (14 percent), and imposter scams (13 percent).

Automobile scams in Nashville

Other than gift card scams, community advocates said that a slew of consumer fraud has been prevalent in different states.

“Here, in Nashville, Tennessee, we have seen a lot of bogus contractors with forged construction licenses,” David Tarpley, attorney with the Legal Aid Society, said at the Tuesday phone briefing. “We have also been dealing with a lot of home foreclosure rescue scams.”

Construction scammers, he added, often promise to replace the roofs or do some home repairs. But after the homeowners pay in advance, the scammers vanish without a trace.

Interestingly, according to Tarpley, the other type of consumer fraud that is becoming more rampant in Nashville is automobile scam. Fraudsters sell flooded or damaged cars that don’t have nondisclosure flood or rebuild titles.

Without knowing the car was damaged, it is almost impossible for the new car owner to get it insured since insurance companies have records on the history of the car.

“Scammers, who are always not from Tennessee, sell these cars for cash. Then, they disappear so chasing the money is almost impossible,” Tarpley said.

Trailer home scams in Kansas City

In Kansas City, according to James Jones, a paralegal with the Kansas Legal Services, trailer scams are widespread, targeting the disabled, elderly, low-income, retirees and veterans.

How does it work? Trailer residents own the structure they live in, but they rent on a monthly basis the land their trailer is on.

But the biggest problem is that the landowner could terminate the trailer homeowner’s lease any time they want, with only a 30-day notice, for any number of reasons, such as having an unauthorized tenant or that the trailer park will undergo an upgrade.

But moving the trailer could cost the homeowner up to $4,000,” Jones said. “It is not easy for these families to relocate because it would affect their jobs or schooling of their children.”

And in Missouri, unlike states like California, New York or New Hampshire, there are few, if any, protections for these trailer residents.

“The only solution that I can think of is through a legislative process,” Jones added. “Trailers should be treated like a real estate property.”

Medicare scams in Boston

As the old Medicare cards are being replaced and new ones have started arriving in the mail since May 2018— so are the scams.

Janice Fahey, legal analyst for vulnerable populations at Massachusetts Attorney General’s Office, said that scammers pose as Medicare representatives to get Medicare recipients’ personal information.

“Scammers are smart. They try to convince many individuals that there’s a fee associated with the new Medicare card so they have to give their credit card information,” Fahey said. “Or, scammers say that Medicare recipients are entitled to a refund and, in order to send the refund to them, they have to give their bank information.”

Since January this year, according to Amy Schram, senior community relations specialist with the Better Business Bureau (BBB), there have been 35,000 fraud-related reports across the United States and Canada.

“One way of protecting ourselves from getting scammed is to resist the urge to answer the calls when we don’t know who the caller is,” she added.

Scams will never go away

As scammers are constantly changing their game and are here to stay, FTC officials and advocates encourage Americans to be vigilant and get informed to protect themselves from scams.

“If the person calling you needs you to send money right away, stop right there,” Vaca said. “Hang up the phone, talk to a friend or a family member—and immediately file a report.”

“This is the time for our communities to respond. We should all promote collaborations,” said Jose Vasquez, supervising attorney with Colorado Legal Services. “And when we collaborate, we increase our resources to address this problem.”