Just as Toni Capen was about to leave her house to play bingo at the senior center, her phone rang: It was a young man claiming to be her grandson, asking her to buy Walmart gift cards to bail him out of jail.
The young man, she said, sounded just like her grandson. He said he had been driving around with friends and that they had been arrested. He handed the phone over to a man he said was the arresting officer. The younger man pleaded with Ms. Capen not to tell his mother. After she hung up, she dialed her grandson’s cellphone, but he didn’t answer. She said this convinced her that he was, in fact, in jail without access to his own phone.
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She went straight to her bank and withdrew $4,000 in cash and then on to her local Walmart.
What happened to Ms. Capen less than two years ago is becoming increasingly common—or is at least being reported with greater frequency. Scammers are calling or emailing people, often seniors, under a variety of pretenses—grandchildren, tech support, tax collectors, etc.—that culminate in requests to purchase retail gift cards.
Why gift cards? Because they allow con artists to make purchases immediately and anonymously. They don’t even need the physical card itself, just the numeric code or bar code associated with the card. Also, unlike with prepaid credit cards, the transactions are difficult to reverse. There are few, if any, reasons why you would use a gift card to pay a legitimate business or government entity, but scammers can be very crafty in their pitches.
Even businesses are targeted. Peter Santis, vice president of global sales at Keeper Security Inc., a password-security software firm, received an email from his boss in May asking him to buy $3,000 worth of Amazon gift cards for clients. Mr. Santis, who was at lunch and saw the message on his phone, saw only his boss’s name—not the domain of the email—and it seemed like a legitimate request. But he remembered his firm’s security-training session and decided to call his boss. Turns out, the email was a fake.
“It can happen to anyone, even someone at a cybersecurity firm,” Mr. Santis said.
According to the Federal Trade Commission, 33% of people who reported losing money to a scam through the third quarter of this year said they used a gift card or reloadable card as payment, up from just 7% in 2015. The amount of money consumers reported having lost in scams in which gift or reloadable cards were used as payment totaled $74 million through September, up from $53 million during the same period last year.
Earlier this month, a suspect in a million-dollar gift-card scheme involving Walmart cards was arrested in Bentonville, Ark., where Walmart Inc. is based. Supermarkets and big-box stores have been increasing staff training on how to spot this kind of fraud, which has resulted in some employees thwarting such scams.
“We know consumers can be the targets of fraud and work diligently on fraud prevention measures and protocols to help protect our customers,” a Walmart spokesman said. “These measures include training our associates to spot threats.”
Although this type of fraud happens year-round, cybersecurity experts warn it could heighten around the holidays when large gift-card purchases are less likely to arouse suspicion at the checkout aisle.
Ms. Capen was so nervous at Walmart that she bought prepaid Mastercards instead of Walmart gift cards. When the young man called her back to make sure she had gotten the cards, he told her they were the wrong kind. He needed gift cards with codes on the back.
“God had given me a chance to fix this, and I was still stupid,” said Ms. Capen, 78.
She went back to her bank and withdrew another $4,000, then went to Walmart again and bought four $1,000 Walmart gift cards, whose code numbers she provided to the young man who called her while she was driving. The man called her again later and said the police also had found drugs in the glove box of the car and that he owed yet another $4,000. And so she made a third trip to her bank and Walmart.
Ms. Capen’s son, who lives with her, noticed she was pacing and wringing her hands when she got home. He called his sister Diana West and said, “Something’s not right with Mom.”
Another of Ms. Capen’s daughters, Wendy Prinz, who lives in another state, received a call from her mom. “She said something very bad had happened,” said Ms. Prinz.
At the time, Ms. Capen still didn’t realize she had been scammed; she was upset at the thought that her grandson was in jail but wanted to keep her promise not to tell. Her son and three of her four daughters began texting one another in an effort to figure out what was going on. Later that day, after Ms. West arrived at the house, the scammers called again and this time, Ms. Capen’s son got on the phone with them. He asked for their names and the police officer’s badge number and precinct, and kept them talking while Ms. West called the police department and learned it didn’t check out. When Ms. Capen’s son confronted them about it, the men hung up.
“None of us were angry at her,” said another daughter, Cindy Lind. “It’s like any other crime—you can’t blame the victim for something that happened to them.”
The family began working to recoup the money. Ms. West went back to Walmart with her mother. A Walmart employee, speaking to Ms. Prinz by phone, was crediting money back to the cards, but the codes were still in the scammers’ hands. There was $650 available on one of them and Ms. Capen wanted it back in cash but said she was told she couldn’t cash it out. She stepped away from the customer-service desk and called Ms. Prinz, who advised her to have the balance transferred to a new Walmart gift card. By the time Ms. Capen returned to the customer-service desk, that $650 had been spent—again.
A Walmart spokeswoman said the company is investigating Ms. Capen’s case.
The Walmart employee who was helping Ms. Prinz over the phone provided her with tracking numbers and addresses where items had been shipped. Ms. Prinz said she was told the items purchased online were shipped to addresses in Portland, Ore., and Ontario, Calif. Among the purchases: a laptop, a desktop computer, baby formula and a camera. Based on Google searches of the addresses, some appear to be warehouses.
Ms. West and Ms. Capen filed a police report with the local police department, which told them they couldn’t do anything because it is considered an internet crime. Ms. Prinz said she called the Federal Bureau of Investigation and filed a complaint online with the bureau’s Internet Crime Complaint Center, but said she never heard back. An FBI spokeswoman said she can’t confirm or deny the existence of an investigation.
Ms. Prinz was able to get cash back from the money her mother had put on the Mastercards. In total, Ms. Capen lost nearly $4,000, a substantial chunk of her savings.
Ms. Capen’s children disconnected her landline and got her a cellphone number under one of their names. Ms. Capen said she no longer answers calls from unknown numbers.
“I’m still sick about it,” Ms. Capen said. “If only I had left five minutes sooner and gone to bingo.”
How to Outsmart the Scammers
Hang up on fishy calls. No business, tech-support service, government or law enforcement agency is ever going to accept payment in the form of gift cards, according to Darren Guccione, chief executive of Keeper Security. “If someone calls you requesting payment over the phone for anything, just hang up,” he said.
Verify the caller. If someone who sounds like a relative calls and claims to be in trouble and needs money, hang up and call the person or another trusted relative and ask if the situation is true. (Don’t fall for the “don’t tell my mom” bit.) If that person isn’t immediately reachable, wait to hear back from the person from a known number.
Confirm the email. If you receive an email asking for money or gift cards from someone you know, look at the email address to make sure it’s coming from the person’s actual email address. Even if the email address looks right, best to call the person to double-check, because scammers can use publicly available data to spoof addresses.
Report the scam. Immediately report the fraud to the issuer of the gift card. The FBI advises people who have been the victims of elder fraud to contact their local FBI field office. People can also file a complaint with the Internet Crime Complaint Center and with the FTC.
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Write to Julie Jargon at julie.jargon@wsj.com
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