IN THIS ARTICLE

• How Scammers Operate
• Gift Card Scam Warning Signs
• Verifying Charities
• What to Do If Targeted
• Staying Alert

How Gift Card Scammers Operate

Gift card scams cost consumers millions each year, with scammers using increasingly sophisticated tactics to separate you from your money. During the holiday season, when gift card purchases peak, fraudsters ramp up their efforts to target generous shoppers. A 2025 AARP report found that about one-third of adults received a fraudulent charity donation request.¹

Scammers that prefer gift card payouts use several tactics to appear legitimate and pressure you into acting quickly. The Federal Trade Commission (FTC) notes that scammers often ask for payment through gift cards, cryptocurrency, or wire transfers. These payment methods are difficult to trace and nearly impossible to reverse.

But hope is not lost. Understanding how gift card scams work can help you recognize the tactics before you lose money.

Fake Emergency Appeals

Scammers may contact you claiming to represent an urgent crisis, such as a natural disaster or medical emergency.

They insist that immediate gift card purchases are needed to help victims. These appeals often appear during high-profile events when legitimate organizations are also fundraising, making it harder to distinguish real from fake requests.

Impersonation of Recognized Organizations

Some scammers pretend to represent well-known charities, government agencies, or even your place of worship. They may use names that sound similar to legitimate organizations to confuse you. The FTC has found that scammers can manipulate caller ID to make their calls appear to come from local area codes or recognized organizations.

Gift Card Payment Requests

The core of most gift card scams is the payment request itself. A scammer may claim to represent a charitable cause and ask you to purchase gift cards as a donation. They then request the gift card numbers and PINs, giving them immediate access to the funds. The FTC warns that no legitimate charity will ever ask you to pay with gift cards. If someone insists on gift card payment, it is a scam.

Gift Card Draining

Criminals also steal barcodes and PINs from physical gift cards in stores by secretly scanning them or swapping out packaging. They monitor those cards until they are activated, then drain the balance before the buyer uses the card. This can affect gift cards purchased for donation or as personal gifts.

Fake Charity Websites

Scammers create websites that mimic legitimate charities, complete with convincing logos and emotional stories. These sites may collect your payment information without directing any funds to actual charitable programs. Some scammers also use stolen credit card numbers to make small test donations on real charity websites, checking whether the cards are still valid before making larger purchases.

Warning Signs of a Gift Card Scam

Recognizing the red flags can help you avoid falling victim to a gift card scam. The following table outlines key warning signs and what each one may indicate:

How to Verify a Charity Before You Give

Before making any donation, take time to research the organization because protecting your financial information starts with knowing who you are dealing with.

Several free tools can help you confirm whether a charity is legitimate:

• The IRS Tax Exempt Organization Search tool lets you verify whether an organization is recognized as tax-exempt and eligible to receive tax-deductible contributions. You can search by the organization's name or Employer Identification Number (EIN).
• The BBB Wise Giving Alliance and CharityWatch offer reports and ratings on how charities spend donations and operate as organizations. These groups evaluate charities based on governance, effectiveness, and transparency.
• Your state charity regulator can tell you whether a charity is registered to solicit donations in your state. Most states require charities to register before soliciting. You can find your state regulator at nasconet.org.

What to Do If You Encounter a Gift Card Scam

If you suspect a gift card scam, take these steps to help yourself and others:

• Stop and research: Do not let anyone rush you into buying gift cards. Hang up and look up the organization independently using the verification tools above.
• Never pay with gift cards: If someone asks you to pay with a gift card, cryptocurrency, or wire transfer, end the conversation immediately. These payment methods are favored by scammers because they are difficult to trace. LPL Financial takes cybersecurity and privacy seriously, but prevention starts with recognizing these tactics.
• Report the scam: File a complaint with the FTC at ReportFraud.ftc.gov. You can also report to your state charity regulator. Your report can help authorities identify scammers and help others avoid being targeted.
• Check your statements: If you have already purchased gift cards and suspect a scam, review your credit card and bank statements for unauthorized charges. Contact your financial institution right away if you notice anything suspicious.

Staying Alert to Gift Card Fraud

Gift card scams exploit the generosity and urgency that motivate people to act quickly. By taking a few minutes to verify any organization before donating, you can help your contributions reach the causes that matter to you.

The holiday season is a time of giving, and scammers know it. Staying informed and cautious allows you to give with confidence, knowing your money is reaching the people and programs that need it most. If you have questions about protecting your finances, consider finding a financial advisor who can help you plan your charitable giving.