SCAMS: Gift Card Scams! Card Declined Scams!

It was the day before Thanksgiving when Mae turned on her Mac laptop. The screen froze, and a message popped up saying there was a problem with her Safari web browser. The message directed her to click on a link that would connect her with the Apple Computer Company. The 83-year-old Maryland resident clicked on the link, and that’s when her nightmare began.

Mae called the number and spoke to someone who claimed to be an “Apple high security technician” who said the laptop problems originated from Mae’s bank. Mae told the individual the name of her bank, and he gave her a number to call M&T, a Northeast bank headquartered in Buffalo, N.Y.

Mae called, and Alivia, who claimed to be part of the bank’s fraud unit, answered. Alivia told Mae that a European pornographer and scammer had tried to gain access to her account and withdraw $20,000 during the night. To protect her money, Alivia convinced Mae to withdraw the $20,000.

Over the next 10 hours, Mae was constantly on the phone with Alivia and her “supervisor,” Mike Ross, who were allegedly trying to help her. Mae did not realize—until it was too late, that they were not trying to find ways to protect her money but to steal her money.

People of all ages fall victim to gift card fraud, but adults 70 and over report much higher individual losses than adults 59 and under, according to the Federal Trade Commission. The federal agency also said gift cards are a leading fraud payment method reported by older adults. AARP reports that scammers steal an estimated $8 billion every year from adults 60 and over through stranger-perpetrated frauds.

The bad news is that federal regulators have not protected the public from gift card fraud, nor have they given gift cards the same consumer protection as those that are given to credit and debit cards, according to Dr. David P. Weber, professor of the Practice in Fraud and Forensic Accounting at Salisbury University in Salisbury, MD, and Jake Bernstein, a two-time Pulitzer Prize-winning investigative journalist. Weber and Bernstein are investigating how cracks in the financial regulatory system—dating back to the Civil War—have been exploited by fraudsters and corporations.

Weber and Bernstein noted in an article for The Conversation that gift cards have been hit with “an epidemic of card draining,” which occurs when con artists either steal barcodes from gift cards or put in new barcodes they already control. Scammers monitor the barcodes and are alerted when someone puts money on the card. Fraudsters use the card’s account number to buy items online or use “mules” or “runners” who physically go into stores to make the purchase. The card is “drained” of money by the time the gift recipient wants to buy something.

Sadly, the investigators said many older adult victims do not report their losses because they do not want their children, caregivers, or authorities, like Adult Protective Services, to find out what happened to them.

Seniors like Mae enter into what AARP calls a “fear bubble,” a state of intense fear or panic scammers create to make older adults lose their ability to think rationally and be willing to turn over their money or personal information to strangers.

During Mae’s ordeal, the fraudsters directed Mae to protect her money by signing up for a cryptocurrency account, which she did. The crooks sent Mae to Bitcoin ATMs, where she deposited $15,000 before her money was frozen by a concerned man at a Bitcoin exchange. Not to be deterred, the scammers directed Mae to buy gift cards.

By the time Mae got home, she realized that she had been scammed.
“It was a big fat light bulb: ‘You’ve been screwed,’” Mae told The Conversation.

Mae did not want her last name published for fear of being victimized again, as well as being embarrassed over what happened to her. Nonetheless, she told Weber and Bernstein that she wanted to tell her story so that other people would not make the same mistakes.

BBB Warns “Card Declined” Message for Online Purchases Could Be a Scam

Rob Gilbert went online and clicked on an ad from a major retailer to buy items for himself and his mother’s birthday. When the Fort Collins, Colorado resident went to check out, a message popped up saying, “Card Declined.”

So, Gilbert used the debit card number that he had saved on his phone. Subsequently, Gilbert discovered that his card was not declined. He was the victim of a scam. Both cards were almost immediately used for unauthorized transactions.

The Better Business Bureau (BBB) is alerting the public to a rising trend of consumers reporting similar incidents on its BBB Scam Tracker. This is how the scheme works:

Consumers shop on what they think is a legitimate website or click on an email or a social media ad that takes them to a shopping website.
Consumers enter their name, address, email address, and payment information.
Consumers receive a message that reads “card declined” or “your card did not go through for some reason.”
Thinking that this could be a mistake or that there are not enough funds in the account, the consumer uses another form of payment.
Consumers receive a real email or text from their card issuer saying that fraudulent purchases have been charged to their account.

“If you are shopping online and your card declines, resist the urge to use a different card,” BBB spokeswoman Melanie McGovern told USA TODAY. “Instead, reach out to your bank to see if there is a problem.”

The BBB has some tips for consumers to avoid online scams:

1. Verify that the website is legitimate. Look at the website’s URL or web address for “https://“ to make sure the website is secure. Fraudsters create fake websites that look similar to legitimate websites to trick shoppers into thinking they are on a legitimate site.
2. Watch out for fake emails, texts, and ads that scammers use to impersonate businesses. Go to the business’s website on your own if you are in doubt about the message.
3. Don’t be lured by great offers. If the price seems too good to be true, then it probably is, and there is a good chance that it is a scam.
4. Look up customer reviews of a business before purchasing from that business. Also, search for reviews of businesses online and on BBB.org. To see if this is a scam, search on BBB Scam Tracker.
5. Make purchases with a credit card. Credit card issuers offer protection against fraud and investigate customer disputes of unexpected charges.
6. Find out what protections are available from your credit and debit card issuers. Also, you can set up notifications for when purchases are made, purchase limits, travel restrictions, and more.

If you suspect fraud, McGovern recommends monitoring your credit card transaction for any unusual activity and reporting it to the BBB’s Scam Tracker.

Source Links:

https://theconversation.com/gift-card-scams-generate-billions-for-fraudsters-and-industry-as-regulators-fail-to-protect-consumers-and-how-one-83-year-old-fell-into-the-fear-bubble-236439
https://www.ftc.gov/news-events/data-visualizations/data-spotlight/2022/12/who-experiences-scams-story-all-ages
https://www.usatoday.com/story/money/2024/09/27/card-declined-message-scam/75366466007/