iTunes Gift Card Scam: Avoid Becoming A Victim

Gift cards are like cash and thieves love to steal cash. So I guess we really shouldn’t be surprised by the latest con involving iTunes gift cards.

According to a recent warning on the Federal Trade Commission (FTC) website, iTunes gift cards are being used to commit all types of fraudulent phone scams.

“We’ve noticed a real spike in complaints and consumer losses related to iTunes gift cards,” said Karen Hobbs, a senior attorney at the FTC. “iTunes is certainly a recognized name, but many people don’t understand how it works, and that’s what the scammers are counting on.”

The scams range from phony debt collectors attempting to keep your bill from going to collections– to callers who pretend to be loved ones in desperate need of money to handle an emergency.

Then there’s my personal favorite—the fake IRS agents.

That’s right. They call you posing as an IRS employee or pretending to be with the Treasury Department. Then– in an effort to convince you to pay– threaten you by saying you will be arrested if you don’t pay the back taxes you owe at that very moment.

They have even gone as far as telling victims that the police had been notified and were currently in route to their home.

Most of these victims don’t even owe back taxes!

Sounds insane right?

Believe it or not, this scam works.

In fact, the U.S. Treasury Department recently had to release a scam alert concerning this very issue.

“Any call requesting taxpayers place funds on an iTunes gift cards or other prepaid cards to pay taxes or fees is an indicator or fraudulent activity!” the Treasury Inspector General for Tax Administration cautioned.

The Con:

Here’s how it works:

The perpetrator will call an unsuspecting victim and present a scenario pressuring them into feeling that money must be delivered at that moment or they will suffer severe consequences. The victim is instructed to go to a store, purchase an iTunes gift card and load money onto it.

They are then required to provide the 16-digit code on the back of the card to the caller. All this is done by a phone call, through text or email.

Sometimes, the crook will even stay on the phone with the victim as they go to the store and buy the card.

“Once this is done, the money on the card is quickly depleted by the scammer and the consumer is left with a worthless piece of plastic,” said John Breyault, a vice president at the National Consumers League who oversees the organization’s Fraud.org website. “Think of those digits on the back of these cards as cash. Giving that code to somebody is like giving them cash. If they’re asking for payment by an iTunes gift card, it’s a scam. Don’t do it.”

Stolen iTunes gift card codes are also being sold on the black market, Breyault told NBC News.

He went on to say, “It sounds crazy, telling people to use gift cards to pay for an unpaid debt or back taxes, but it works. People are doing it and losing significant amounts of money.”

The solution?

Here’s some advice from the Treasury Inspector General for the Tax Administration:

“Any call requesting that taxpayers place funds on an iTunes Gift Card or other prepaid cards to pay taxes and fees is an indicator of fraudulent activity! No legitimate United States Treasury or IRS official will demand that payments via Western Union, MoneyGram, bank wire transfers or bank deposits be made into another person’s account for any debt to the IRS or Treasury. Hang up on these fraudulent callers and go to the TIGTA scam reporting page to report the call.”

Featured image by bm.iphone of Flickr and available for use under Creative Commons 2.0 license