The Federal Trade Commission warns that online shopping and gift card scams frequently occur during the holiday season. The agency states that scammers create fake websites and demand specific payment methods to steal money from consumers. Understanding how these frauds operate can help shoppers identify warning signs, according to the FTC.

How online shopping scams work

Scammers often impersonate legitimate companies on social media by running advertisements for brand-name products at unusually low prices, the FTC says. The agency notes that many of these bogus sites use photos and logos stolen from legitimate businesses.

When a consumer clicks the link in one of these advertisements, they are directed to a fraudulent website, according to the FTC. The agency explains that the site is designed to take the buyer’s money while sending a counterfeit item, a completely different item, or nothing at all.

The FTC states that unusually low prices on typically expensive items are a strong indicator of a fraud.

How gift card scams operate

Fraudsters often contact victims through calls, texts, emails, or social media messages to demand payment via gift card, the FTC says. The agency explains that scammers create a sense of urgency, telling individuals that something terrible will happen if they do not pay immediately.

Scammers frequently tell victims exactly which gift cards to buy, such as Apple, Google Play, or Target cards, and direct them to specific stores, according to the FTC. Sometimes, the caller will stay on the phone while the individual purchases the card and loads money onto it.

Once the card is purchased, the scammer asks for the card number and the PIN on the back, the FTC states. The agency warns that these numbers allow the scammer to steal the funds, even if the victim still holds the physical card. No legitimate business or government agency will ever require payment by gift card, the FTC says.

Common stories used by fraudsters

Scammers invent various stories to convince individuals to purchase gift cards, according to the FTC. Some claim to be from government agencies like the Internal Revenue Service or the FTC, demanding money for taxes or fines.

Other common tactics include pretending to be tech support representatives who need payment to fix a computer, or utility companies threatening to shut off service, the FTC says. Fraudsters may also pose as a friend or family member in an emergency, sometimes using voice cloning technology to sound authentic.

The FTC notes that romance scammers on dating websites and criminals claiming the victim has won a prize also use gift card demands to steal money.

Steps to protect purchases

The FTC advises consumers to research unfamiliar sellers before making a purchase by searching the company’s name alongside words like “review,” “complaint,” or “scam.” Shoppers should also check the terms of the sale, including refund policies and return shipping costs, according to the agency.

Consumers should pay with credit cards whenever possible, the FTC says. The agency explains that credit cards provide protections that allow buyers to dispute charges if an item arrives damaged, is incorrect, or never arrives.

The FTC advises against buying from sellers who demand payment through gift cards, wire transfers, payment apps, or cryptocurrency. When purchasing physical gift cards, the agency recommends inspecting the packaging for tampered stickers or exposed PINs and keeping a copy of the card and receipt.

What to do if scammed

If a consumer has a problem with an online order, the FTC says they should first attempt to resolve it directly with the seller. If that fails, the agency advises contacting the payment company to dispute the charges.

Individuals who have given gift card numbers to a scammer should immediately contact the gift card issuer to report the fraud and ask for their money back, according to the FTC. The agency notes that some companies can freeze the funds if they are still on the card.

The FTC asks consumers to report all suspected shopping and gift card frauds to the agency through its official fraud reporting website.