Prepaid Card Scams: What to Look Out for

Prepaid Card Scams: What to Look Out for


A common type of computer or phone scam involves prepaid gift cards, the kind you’d buy at a convenience store or grocery store. If you’ve ever seen an older person buying an unusual quantity of gift cards at a grocery store checkout line, you might have seen the endgame of a particularly unscrupulous scam.

So, why do so many scammers prefer prepaid gift cards for their illicit payouts? And how can you detect these scams from a mile away? Read on.

Why Prepaid Cards?

Prepaid gift cards have some benefits over cash or money transfers. If you demand someone simply mails you cash, then it’s going to be pretty difficult to get large sums past the post office. Mailing currency isn’t illegal, of course, but it is considered a risking proposition by pretty much everyone. Money orders are better for security, but, due to the recipient needing to cash them, they’re not ideal for someone running an illicit scam.

The same is true of checks, which need to be cashed, and wire transfers, which require bank account information that can be linked back to the scammer. So, scammers will have their marks purchase prepaid gift cards for them and give them the numbers from the card in order to use the funds themselves.

Such gift cards are non-refundable and can’t be canceled. As such, the relative anonymity a scammer needs to operate is maintained by the gift card, allowing them to carefully sidestep most regulations.

How to Spot the Scames

Thankfully, these scams are easy to see coming and can be avoided with some simple steps. If you’re on the phone with someone who claims you owe them money, you’re probably talking to a scammer. If the person says you can settle up with them by buying them a lot of prepaid gift cards, it’s definitively a scam.

Such scammers typically target older people, knowing that many older victims won’t see the red flags indicating that the endeavor is actually a scam. As such, if you see an older person in a store purchasing an unusual number of prepaid gift cards, don’t just assume they’re doing so for their grandkids.

Asking them if they need help, or if someone is compelling them to do this, could be invasive. It could also save the person from wasting thousands of dollars on an unscrupulous scammer. While it’s difficult to advise someone who thinks they’re in serious trouble, it could help someone to just ask them what’s going on.