Consumers Swindled With Gift Cards

David Tarpley (far left) at FTC Consumer Fraud meeting in Nashville March 2018. Tarpley is Managing Director of consumer affairs for the Tennessee Legal Aid Society. He teaches at Vanderbilt Law School, plays the French horn, and has been practicing consumer law for 40 years.

By Peter White

NASHVILLE, TN — Imposters are using gift cards to swindle consumers out of millions of dollars. 

Scam artists offer to help with back taxes, a big debt, or an imminent home foreclosure. They say a grandson has been taken by Child Protective Services or landed in jail. It could be someone courting over the Internet who has had a terrible accident. 

“They’ll create this sense of urgency. They’ll tell you need to send money right away,” said Monica Vaca, Associate Director of the FTC Division of Consumer Response and Operations.   Vaca investigates, prosecutes, and sometimes recovers cash for the victims of imposter scams.

Grifters have more ways to get your money than a dog has fleas. They have used Western Union wire transfers to defraud consumers. But the FTC’s Consumer Sentinel Network, a data base of consumer reports, collected enough information to press a case against Western Union and Vaca says victims will get $586 million returned to them once it is settled. 

Vaca said imposters claim to be from the IRS and tell people to go buy $!000 worth of gift cards. “And when you’ve got those cards in your hands, he tells you to read the number on the back of the card and just like that your money is gone,” she said.

Vaca has some advice: “If you get this kind of call take a moment before you rush into action. Call a friend, or your spouse, or someone you trust. Tell the about the call. Once you hear it out loud you will realize it doesn’t make any sense,” Vaca said.

In Tennessee, scammers left bogus messages from the Nashville Electric Service (NES) and demanded payment for overdue bills. Customers were instructed to use a prepaid card and call a toll-free number to make a payment. 

“That’s the first I’ve heard of someone masquerading as a collector for a public utility asking for money,“ said David Tarpley, a lawyer with the Tennessee Legal Aid Society since 1971.   

Tarpley says scammers focus on two things most people need: homes and cars. He says imposters pretending to be licensed contractors take money up front for construction jobs and then never come back. 

Tarpley says TN car buyers also get ripped off a lot. They buy a vehicle that has been rebuilt or flooded but pay 2-3 times what it is worth because that information is not disclosed to the buyer. 

“Those types of consumer scams are very prevalent and we see them on a fairly regular basis here,” said Jose Vasquez, a lawyer with Colorado Legal Services in Denver.

“These are individuals who are honestly just trying to make ends meet.  They want to buy the car to get to work. They are wanting to get a roof replaced because it’s hail-damaged,” he said.

Vasquez said many of his clients are Spanish speaking or elderly, easy marks, but he said Colorado has responded more aggressively than other states to protect consumers. 

Colorado enacted a Consumer Data Privacy Act in September. Vasquez says it is one of the strongest in the country and will make it harder for imposters to steal personal information.

Janet Fahey is an analyst with the Massachusetts Attorney General’s office. She reports the latest big scam is Medicare replacement cards.

“The old cards had the social security number on them and that’s bad,“ Fahey said. So Medicare started issuing new cards in May 2018. Scammers quickly pounced on Massachusetts’ one million Medicare beneficiaries.

Fahey says fraudsters claim to be a Medicare representative and ask to verify information for the new card, or they claim there is a fee to get a new plastic card and they need a credit card payment, or they claim you are entitled to a refund from the old card, which is paper, and ask for a bank account number for processing the refund. The new cards are thin paper just like the old ones. And there is no fee.

“What I hear more than any other scam are these Microsoft phone scams,” said Amy Schram. She works for the Better Business Bureau in Boston and logged more than 35,000 complaints since January 2018.

“They said they were going to shut down their computer if they didn’t hand them money right away or go and get a gift card.”

“It’s really about reprogramming that urge to answer,” she said. Schram said you can’t rely on caller ID anymore because scammers know how to make their call from Dubai or Jamaica or India look like it’s a local call. And with the advent of Internet phone service, you can make millions of calls for pennies. Scammers exploit that technology. 

Her advice: if you don’t recognize the number, let it go to voicemail. Scammers rarely leave messages because it’s a thread law enforcement can follow to get the bad guys. In order to catch them the FTC need victims to file a report at ftc.gov/complaint or call 1-877-FTCHELP. 

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