Consumer Alerts: Prepaid Cards and Gift Card Scams

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Prepaid Cards and Gift Card Scams

Source: web

Seems as though the new year brought with it a host of new scams. Every week, we see new alerts and warnings. This week, it appears the focus is on prepaid and gift cards. It’s incredibly difficult to know how many scams and how many thieves there are on any given day; the dynamics change quickly. Still, we have the latest efforts that are currently making the rounds. Here are a few of those latest efforts:

Con artists have long since known many consumers don’t pay attention to their bank statements. Until and unless some big glaring difference is noted, it’s not unheard of for bookkeepers and tax preparers to receive 12 still-sealed bank envelopes from their clients. Or worse, some consumers pay so little attention to their monthly statements that they toss them as soon as they arrive. Postal inspectors are doing their part to remind consumers of the simple scams that are occurring every day due to those lax habits.

Easy Scam

The scam is easy. Thieves troll trash cans for those statements from banks and credit card companies. Once they have what they need, explains David Gealey, U.S. Postal Inspector, they’re well on their way,

We believe it was through either an online chat room where they purchased these credit card numbers.

They then go to a store that sells prepaid gift cards, pick up several and then proceed to the checkout counter. Once there, they make up a story to the cashier as to why their own card can’t be swiped. The cashier then keys the number manually, completes the transaction and their own their way.

The gift card balances are then converted to a prepaid debit card.

Once they transfer those funds, they are as good as cash to them they can go to any merchant or any bank and obtain cash,

said Gealey. In 5 to 10 minutes, they can obtain thousands of dollars in cash.

It wasn’t until postal employees caught the efforts on surveillance tapes of crooks actually watching the cashiers key the numbers in. The number of cashiers willing to do that was astonishing. From there, law enforcement steps in and begin their efforts of identifying, arresting and eventually prosecuting the thieves.

Postal inspectors were able to learn the intricacies of the scam through this surveillance tape.

They would never actually give them the card to the clerk when they actually asked for it…oh here I’ll just read you the number, they would cup the card, and the clerk is just punching in the numbers,

said Gealey.

To avoid becoming a victim of these types of scams, consumers are encouraged to pay attention to their mail and to not toss the kind of information that provides any kind of identifiable information. The postal service says few victims were even aware their credit card numbers and banking information had been stolen.

MoneyPak

There’s also another scam that’s making the rounds, this time, using MoneyPaks. Unfortunately, thieves who get their hands on these currencies are harder to catch because they’re not linked to any bank account or debit account. If it’s stolen, it’s impossible to get back.

MoneyPaks are most often used with the Green Dot prepaid debit cards.

One consumer says he received a Facebook message from someone claiming to be a Green Dot employee and asked him if he’d like to earn quick cash by loading money onto a MoneyPak. The consumer said the woman told him she’d “add a zero” to whatever amount he put on the account. All that was required of him was to buy the MoneyPak and put it on a Green Card. From there, he simply had to give her the serial number to the card and she’d add that zero. Fortunately, he didn’t fall for it.

It sounds pretty scandalous to me. I mean it’s sad that they would rip somebody off like that when there’s legitimate ways to make money out there.

Thieves like these scams because the transactions can’t be reversed or traced.

Better Business Bureau

The Better Business Bureau is warning consumers that any requests like these, especially if they include MoneyPaks, are to be treated as a scam. Any information shared about any account, including the serial number on the back of the cards, can be stolen.

It offers tips on how to protect yourself and your cash.

Always treat your MoneyPak number as you would cash in your wallet, is crucial said a BBB spokesperson. Never give your MoneyPak number to anyone you don’t know and never provide information from your receipt to anyone, either. You should only use MoneyPaks to reload debit cards or accounts that you own and you should always refuse any offer that asks you to buy a MoneyPak in exchange for a fee paid to you. Also, if you’re using your MoneyPak for any online merchants, be sure to transfer it to your Paypal account or other account before using it to pay for goods or services. You should never email your MoneyPak number to anyone.

Also, never purchase a MoneyPak to pay fees for winning some kind of lottery or to pay taxes on winnings. If you’re unsure as to whether or not it’s a MoneyPak supported contest, you should contact MoneyPak. Also, some scammers are taking advantage of those who are attempting to repair their credit. You should never agree to loan conditions that require you to make the first few payments “in good faith”. Those are scams.

Unfortunately, scam artists never rest and just when it seems as though law enforcement and other officials know what their next move is, there’s always something they didn’t expect. These thieves go for the path of least resistance and it’s up to you as a savvy consumer to ensure you’re not it. If you have questions or feel like you’ve been scammed be sure to document it with law enforcement and your bank or credit card company and notify the Better Business Bureau, as well.

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About Author

David is a CPA and has spent the past decade as a financial adviser helping clients meet their fiscal objectives. With an appreciation for journalism, he has spent the past few years overseeing several financial columns as well as writing two previous finance blogs. He resides on the East Coast with his wife and two sons and has guided many through the recent recession while providing a no-nonsense approach to spending and saving.


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CREDIT DAD is an independent, advertising-supported website. Many debit cards, credit cards and other financial offers that appear here are from companies from which CREDIT DAD Websites receive compensation. This compensation may impact how and where products appear on this website (including, for example, the order in which they appear). CREDIT DAD Websites do not include all card offers in the marketplace.