Businesses in NY must post notices warning of gift card fraud as of Tuesday

NEW YORK — Beginning Tuesday, June 20, businesses that sell gift cards in New York State must post a sign near these products warning consumers about gift card fraud.

This is part of a new law that seeks to protect buyers from possible gift card scams, recalled New York Secretary of State Robert J. Rodríguez.

The reason for the creation of this law is because it has become more common for scammers to ask their victims for gift cards as a form of payment because the funds are almost impossible to trace. According to the Federal Trade Commission, in 2022, nearly 65,000 consumers filed a complaint related to gift card scams, equating to a total loss of $228.3 million.

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

As a reminder, new legislation began in December 2022 that allows all gift cards or gift certificates purchased in New York State to be valid for a minimum of nine years from the date of purchase.

How the law works for business

To address the growing prevalence of gift card fraud, this new law requires retailers and businesses to clearly post a notice at or near the gift card display or point of purchase to help increase public awareness of gift card fraud. this scam and provide guidance to vulnerable customers if they believe they are being scammed.

Gift card sellers must display these signs in an area visible to consumers and near where the gift cards are displayed or sold.

What should the warning notice have?

The State Department’s Division of Consumer Protection has created and posted sample notices that gift card sellers can download and post to comply with this new law. Businesses are encouraged to access these downloadable signs and post them where they sell gift cards. These downloadable signs are available in three different sizes on the website of the Consumer Protection Division here.

Businesses can also create their own notice that includes the following guidance:

• Warn shopper about prepaid card scams.
• It instructs the buyer on what to do if they suspect they might be a potential victim of such a scam.

What are some examples of gift card scams

Gift card scams can take many forms, but are often phone calls directed at consumers, particularly the elderly and immigrants, stating that they owe money and payment is required with a gift card. Below are examples of different forms of gift card scams:

• A consumer received an email that appeared to be from eBay stating that the consumer needed to call to verify their account. The consumer called and was told that in order to complete verification, he needed to purchase an eBay gift card and provide the code. The consumer recognized that it was a scam and ended the call.
• A consumer bought a puppy from a breeder who advertised on Facebook Marketplace. The puppy was $2,000 plus fees, but the breeder stated that he did not accept credit cards, so he directed the consumer to purchase Visa gift cards and provide the numbers and PINs. The consumer purchased a total of $3,700 in gift cards to pay for the cost of the puppy, shipping, crate, and insurance. The breeder then disappeared, and the consumer now realizes that he was conned out of $3,700.
• A consumer received a Facebook message from a friend saying he was stranded with a flat tire and needed money for a tow truck and a new tire. The “friend” asked if the consumer could buy him a $500 gift card and he would pay him back. The consumer bought the gift card and provided the number and pin, but later discovered that his friend’s Facebook account had been hacked and the $500 request was a scam.
• A senior citizen received an email that appeared to be from his bank to authorize a large cash transfer to an offshore account. The man did not know about the transfer, and when he called the phone number in the email, he was told the only way to stop the transfer was to overdraw his account so there would be no money to transfer. The man was told to purchase $7,200 in gift cards and the bank would immediately process them to account for the overdraft. He purchased the gift cards and provided the account and pin numbers as directed. The victim’s wife believed that it was a scam and encouraged him to go to a bank branch to verify the information. She later found out it was a scam but, at that point, he had already lost $7,200.

How can I make a claim or get more information?

The Consumer Assistance Help Line 1-800-697-1220 is available Monday through Friday from 8:30 am to 4:30 pm, excluding state holidays, and consumer complaints can be filed at any time at www.dos.ny.gov/consumer-protection.

For more information to inform consumers go here.

For more guidance to inform and empower New York consumers purchasing gift cards and gift certificates, please see the December 2022 consumer alert from the Division of Consumer Protection, which clearly outlines card fee bans. gift certificate and expiration date limitations. Businesses and consumers are encouraged to learn more about the resources available on the Consumer Protection Division’s website.