Gift cards are a popular and easy holiday gift available off the rack at retail stores or bought with a few clicks online.
Recipients love them, too. Better Business Bureau recently reported that according to the National Retail Federation, gift cards are the top-ranking item on many wish lists, with nearly 60 percent of consumers surveyed in a 2019 poll saying they would request gift cards.
Gift cards carry risks, too, and can be exploited by fraudsters, the BBB said. From January to September 2021, nearly 40,000 people reported $148 million stolen using gift cards, according to the Federal Trade Commission.
The nonprofit watchdog’s regional offices warn that those who give and receive gift cards need to check the legal fine print that comes with the card. Gift card recipients may be on the hook for unwanted fees over time.
Michelle L. Corey, BBB St. Louis president and CEO, said that “buying cards with too many fees or conditions can erode a card’s value. You may be better off giving cash or a check instead of plastic.”
Meanwhile, it’s important to make sure security seals on physical gift cards are intact at the point of sale.
Once the cards are received by friends and loved ones, be sure to spend them at stores, websites or apps belonging to legitimate retailers. BBB said recently that it receives hundreds of complaints about gift card purchases every year. Some consumers have reported problems with sites that sell gift cards online. Some online retailers offer gift cards that can be delivered directly to the recipient, saving an unnecessary trip to the store during times of social distancing.
BBB encourages consumers to be sure that the websites where they buy gift cards are secure. A secure website will use “https://” in the website address of the pages where a shopper enters payment information.
Once a gift card is in hand, there are other risks.
“Anytime someone asks for you to pay with a gift card, that should be a red flag,” said Stephanie Garland, regional BBB director in Springfield.
BBB gets plenty of reports in which scammers pretend to offer great shopping deals by impersonating Walmart, Target and other big-box stores.
“However, the catch is you have to read off the numbers on the gift card to the person on the phone,” Garland explained.
This is not the way to use gift cards: As many consumers learn the hard way, after falling for the read-off-the-numbers scam, their gift-card money is quickly spent by the scammer, often within minutes or hours.
“This is why, in many of these big box stores, you’ll see warning signs printed out behind the customer service desk warning customers of different scams involving gift cards,” Garland explained.
In the U.S., the Credit Card Accountability, Responsibility and Disclosure Act provides some protections to consumers who receive gift cards, such as requiring that card balances remain valid for five years after issuance or after they were last loaded with money. But the law doesn’t ban fees or expiration dates completely.
More BBB tips on buying gift cards
- Be cautious about buying gift cards from online auctions because it is virtually impossible to tell whether the cards have any value remaining, whether they’ve been tampered with or if they’ve expired. A St. Louis man told BBB in May 2020 he had purchased several discounted airline gift cards through a third-party gift card dealer, only to discover the cards had no value and the dealer would not refund his money.
- When buying gift cards in a store, check the packaging and any security seals to be sure they are intact and haven’t been broken.
- Check the fine print to see if there are fees associated with the card. Some typical fees could include transaction fees or inactivity fees. In some cases, an organization may charge a service fee to issue the card or a replacement card.
- See if the card has an expiration date. In some cases, the card may expire before the five-year redemption period. Are there fees to obtain a new card?
- Check the terms and conditions on a gift card. If you are giving a card to someone who wants to shop online, make sure it can be used that way and not just in a store.
- Consider the financial condition of the retailer. If you think the store may be on shaky footing, you may want to pass on buying a card.
- Consumers can learn how to protect themselves or find BBB Business Profiles and BBB Charity Reviews by calling 888-996-3887 or by going online to BBB.org.
Garland, with the BBB in Springfield, told the News-Leader that one consumer reported he lost as much as $14,500 this year. Other consumers have reported losing $10,000 and $7,000.
“BBB doesn’t even want for you to lose a cent to a scam,” Garland said. “Our plea to consumers is think twice before paying with a gift card.”
Reach News-Leader reporter Gregory Holman by emailing [email protected] Please consider subscribing to support vital local journalism.