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The American Association of Retired People (AARP, an advocacy non-profit for older adults) has paid for ads on podcasts I listen to. The ad made a claim which felt raspberry-worthy (in service of an important public service announcement), which they repeat in writing : Asking to be paid by gift card is always a scam.
Of course it isn’t. Gift cards are a payments rail, and an enormous business independently of being a payments rail. Hundreds of firms will indeed ask you to pay them on gift cards! They also exist, and are marketed, explicitly to do the thing that the AARP implicitly asserts no business or government entity will ever do: provide a method for transacting for people who do not have a banked method of transacting. [0]
Gift card scams are also enormous. The FBI’s Internet Crime Complaint Center received $16.6 billion in reports in 2024 across several payment methods; this is just for those consumers who bothered reporting it, in spite of the extremely real received wisdom that reporting is unlikely to improve one’s direct situation.
The flavor texts of scams vary wildly, but in substance they’ll attempt to convince someone, often someone socially vulnerable, to part with sometimes very large sums of money by buying gift cards and conveying card information (card number and PIN number, both printed on the card) to the scammer. The scammer will then use the fraud supply chain , generally to swap the value on the card to another actor in return for value unconnected to the card. This can be delivered in many ways: cash, crypto, products and services in the scamming economy (such as purloined credit cards or even “lead lists” of vulnerable people to run more scams on), or laundered funds within regulated financial institutions which obscure the link between the crime and the funds (layering, in the parlance of AML professionals). A huge portion of running a gift card marketplace is trying to prevent yourself from being exploited or made into an instrumentality in exploiting others.
It surprises many people to learn that the United States aggressively defends customers from fraud over some payment methods , via a liability transfer to their financial institution, which transfers it to intermediaries, who largely transfer it to payment-accepting businesses. Many people think the U.S. can’t make large, effective, pro-consumer regulatory regimes. They are straightforwardly wrong… some of the time.
But the AARP, the FBI, and your friendly local payments nerd will all tell you that if you’re abused on your debit card you are quite likely to be made whole, and if you’re abused via purchasing gift cards, it is unlikely any deep pockets will cover for you. The difference in treatment is partially regulatory carveouts, partially organized political pressure, and partly a side effect of an accountability sink specific to the industrial organization of gift cards.
Most businesses do not run their own gift card programs
There exists an ecosystem of gift card program managers, who are essentially financial services businesses with a sideline in software. (I should probably mention that I previously worked for and am currently an advisor to Stripe, whose self conception would not be precisely that, but which a) supports many ways for people to pay money for things and b) does not necessarily endorse what I say in my personal spaces.)
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