New law in New York will require gift card retailers to warn consumers of potential scams

Photo (c) Fiordaliso - Getty Images

The state is hoping to protect residents from falling victim to a harmful scam

Gift card scams have gotten more common, especially as of late. Whether scammers are tampering with gift card racks in stores, or draining Vanilla Visa gift cards before consumers can purchase them, it isn’t hard for the popular gift item to become compromised. 

To help protect New Yorkers from these widespread scams, the state has taken legal action. As of Tuesday, June 20, any store selling gift cards is required to post warnings to consumers about the potential gift card scams. 

“With the number of gift card scams on the rise, it’s more important than ever to educate consumers so they know that gift cards should only be used for gifts, not to make payments,” said Robert J. Rodriguez, secretary of state of New York. “This new law requiring signage where gift cards are displayed or sold will help to reduce the success rate of these scammers and protect consumers’ hard-earned money.” 

Educating and protecting consumers

Under the new law, any store selling gift cards must have some kind of signage indicating the risks associated with gift card fraud and other related scams. The signs must be clearly visible to shoppers and close to either the store checkout or where the gift cards are displayed. 

The New York Department of State’s Division of Consumer Protection created signs that business owners can download and hang in their stores. They feature an image of a stop sign and the words “SCAM ALERT” at the top, with a notice to be aware that gift cards are for gifts – not for payments.

The bottom of the sign has the phone number for the NYS Division of Consumer Protection where shoppers can report any scams they may encounter. 

Retailers are also free to create their own signs and display them. Personally-made signage must include instructions on how to report a scam and caution shoppers about prepaid gift card scams. 

How to avoid these scams

For many of these scams, gift cards are tampered with or the funds are drained before shoppers even purchase them. In these instances, experts recommend that consumers do a thorough inspection of the physical gift card before purchase, and choose cards that look to be in good physical condition, that are in the direct eyesight of the cashier, and that are in the back of the pile, as these are the least likely to have been tampered with. 

These scams also take the form of urgent requests for money – either to verify social media or online accounts, or to help “friends” out of sticky situations – that must come via gift card.

Payment with a gift card should always sound an alarm bell. Consumers should avoid purchasing a gift card or sending gift card details to a scammer. 

The best course of action if you suspect you’ve been scammed is to report the activity to either the Federal Trade Commission or your state’s consumer protection agency. 

“Gift cards are an increasingly prevalent way for con artists to steal from people,” said Assemblywoman Amy Paulin. “As soon as someone tells you to pay them with a gift card, you should immediately suspect that it’s a scam.” 

Take a Financial Relief Quiz. Get matched with an Authorized Partner.