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One of the biggest challenges for online scammers is to route victims’ money in such a way that it cannot be traced back to them. Essentially, they use various money laundering techniques to mask the original source of the money they receive from victims.
In our article on safe payment methods, we listed some unsafe payment methods that make it difficult or practically impossible to get your money back. One of the least safe methods listed is Gift Cards and in this article, we will go into detail about why paying someone using gift vouchers is a terrible idea.
Gift Cards are a popular money-laundering tool for several different types of scammers. Tech support scams, IRS scams, marketplace scams and many more commonly require victims to purchase gift cards and share the voucher codes with the scammers.
Scammers use high-pressure tactics to get victims to drive to stores such as Walmart, Target and CVS to purchase the store’s physical gift cards. Alternatively, they may ask victims to purchase online gift cards from Amazon, Google Play, Apple, Steam Gift Cards and other popular brands.
According to the Federal Trade Commission (FTC), the total loss to gift card payment scams in the USA increased to $148 million between January to September 2021. Scammers pretending to be online buyers, representatives of tech companies such as Microsoft or Amazon, or government officials working with the IRS or CRA can steal thousands of dollars in one go - all in the form of gift cards.
Why do these scammers insist on being paid using gift cards? The answer is quite simple - gift cards are the next best thing for scammers after cash and crypto. They are anonymous and virtually untraceable, and there is no way for victims to get a refund. Once a gift card or e-voucher has been shared with a scammer, the money is immediately gone.
Converting gift cards into money is relatively effortless in current times. Gift cards can be easily and instantly exchanged for Bitcoin on platforms such as Paxful.
Scammers are only able to get 25% to 50% of the original value of the card on these platforms. For scammers, this is a small price to pay as the cards are stolen anyway.
The Bitcoin can then be converted into fiat currency to be deposited into the scammers’ bank account or withdrawn as cash.
This entire process is carried out within minutes by scammers once they receive the gift cards, ensuring that victims have no recourse even if they realise that they have been scammed.
It is easy to avoid losing money to gift card scammers by keeping this simple rule in mind - Gift cards are not a form of payment. If a bank employee, utility company representative, government official or anyone else for that matter asks you to pay them in gift cards for any reason, you can rest assured that it is a scam. No legitimate organization or individual will ever ask to be paid using gift cards.
Now that you are aware of why scammers ask for gift cards, you can prevent being scammed by simply denying their demand. No matter how convincing the scammer is, do not panic and just hang up the call.
