Scams and Guidelines for Retailers to Prevent Fraud
April 29, 2022
Acting Attorney General Matthew J. Platkin today announced that the Division of Consumer Affairs has issued a consumer alert on gift card scams along with guidelines for retailers to train their employees on signs that a consumer is falling victim to this common form of fraud.
“The best tool we have to fight gift card scammers is widespread awareness of how they operate and how to stop them in their tracks,” said Acting Attorney General Platkin. “We commend the Division’s efforts and look forward to merchants around the state joining us in our efforts to protect consumers from these fraudulent schemes.”
The Division’s guidelines implement the Stop the Fraud Bill, which was signed into law by Governor Murphy in January. The law requires New Jersey retailers that display and sell gift cards to train employees on how to identify and respond to gift card fraud. Covered employees must receive the training by August 1, 2022, or within 45 days of beginning employment, whichever is later.
The purpose of the training is to ensure that employees know how to recognize signs that someone may be the victim of gift card fraud, such as buying multiple gift cards with high dollar values or immediately taking pictures of the gift cards’ serial numbers. According to the guidelines, employees should be trained to use the “If you see something, say something” approach, and if they suspect fraud, ask the consumer why they are making such a purchase.
The required training will also result in retail employees understanding their employer’s policy for reporting suspected gift card fraud. Additionally, the Division’s guidelines encourage consumers and retailers alike to be familiar with a number of best practices to curb fraud.
According to the Federal Trade Commission (FTC), from January 2021 through September 2021, the FTC received over 39,000 reports of gift card fraud that may have cost consumers as much as $148 million. Some common gift card fraud schemes include:
- Government Agency Scams – Someone claiming to be from a government agency demands payment in the form of gift cards to avoid arrest, receive assistance, or pay a fine to stop your social security number from being frozen;
- Utility Scams – Utility company imposters claiming service will be cut off if payment is not received right away;
- Refund Scams – A caller offers a refund, credits money in excess of the refund, and asks to receive the additional money in gift cards;
- Grandparent Scams – Someone pretending to call on behalf of a relative or friend in distress and asking for money to assist them; and
- Freebies and Sweepstakes Scams – A gift card is required to pay a processing fee to receive a prize of free merchandise.
“It takes a village to fight fraud, and that is why we are enlisting everyone’s help,” said Howard Pine, Acting Director of the Division. “By issuing these guidelines we aim to cripple the efforts of scammers who often use fear to intimidate unsuspecting consumers into buying gift cards to avoid utility service interruptions, or help a friend or relative in need.”
For consumers, the guidelines provide details on the preventive measures being implemented by merchants as well as tips to help them recognize gift cards scams. Some of the precautions include:
- Never use a gift card to make a payment or to transfer money. Government agencies and legitimate businesses will never ask you to pay with gift cards;
- Avoid sharing gift card information—including via phone, text, email, or photo—to pay bills or fees, or to fix any other problem;
- Verify that urgent requests or emergencies that involve family, friends or co-workers are real by calling the person directly to confirm they need your help;
- Hang up on any caller who tells you to lie to a store clerk about why you are purchasing gift cards;
- Check the packaging and the back of the gift card before purchasing to make sure it has not been compromised; and
- Keep the receipt or the gift card ID number to file a report if you lose the gift card or suspect fraud.
Consumers who believe they are victims of a gift card scam or suspect gift card fraud can file an online complaint with the Division by visiting its website or by calling 1-800-242-5846 to receive a complaint form by mail. Additional agencies to report this type of fraud and free resources for consumers are also included in the guidelines.
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The mission of the Division of Consumer Affairs, within the Department of Law and Public Safety, is to protect the public from fraud, deceit, misrepresentation and professional misconduct in the sale of goods and services in New Jersey through education, advocacy, regulation and enforcement. The Division pursues its mission through its 51 professional and occupational boards that oversee 720,000 licensees in the state, its Regulated Business section that oversees 60,000 NJ registered businesses, as well as through its Office of Consumer Protection, Bureau of Securities, Charities Registration section, Office of Weights and Measures, and Legalized Games of Chance section.