> This is exactly the behavior that “never happens from a legitimate business” except when it does by the tens of billions of dollars.
> As Bits about Money has frequently observed, people who write professionally about money—including professional advocates for financially vulnerable populations—often misunderstand alternative financial services, largely because those services are designed to serve a social class that professionals themselves do not belong to, rarely interact with directly, and do not habitually ask how they pay rent, utilities, or phone bills.
This resonated for me, and reminded me of the way I and my formally-banked and formally-employed colleagues sometimes struggle to wrap our minds around payday lending (sure looks like usury from the security and comfort of a formal banking relationship!), remittances, hawala, pawn shops, Cash App, gift card exchanges, video game economies… for all the normative thinking in the professional classes, people sure do develop a kaleidoscopic array of approaches to storing and transmitting value.
“Just sanction [whoever]” or “just debank [whoever]” sounds to certain circles like an appealing tool to have—the modern equivalent of exile—but I have to imagine it’s probably healthy that such a tactic is hard for a state actor to apply in a totally watertight kind of way.
One thing I didn't think Patrick quite explored enough: there's a big difference between someone asking you to pay using a gift card and you asking to pay using a gift card.
The examples he gives are predominantly around giving people the option, while the scams are very much pushing a requirement.
If someone wants you to get a gift card to pay them, and won't take cash or credit? Scam. If you have a gift card already and someone's willing to accept it in lieu of cash? Probably no more likely to be a scam than any other vendor?
I completely agree. I struggle to think of any legitimate business that would allow only gift cards. Maybe some privacy oriented VPN providers?
In any case, I think this is almost a willful misunderstanding. Not only does it attack the straw man of "no one ever gets legitimately paid in gift cards", but literally the first counterexample, Paysafecard, isn't a gift card!
Blizzard runs several popular games where you need to buy their currency before you can buy anything. I don’t know if it’s the case anymore, but Microsoft used to require Xbox Gold to purchase games.
Usually this requires locking more up than the purchaser intended to spend.
It's interesting (to me, at least) to see the kinds of discounts that folk apply to gift card transactions. It's not unheard of for a colleague to end up with a gift card they can't use, and while there's a real sense in which the card is worth its face value, there's also a sense in which its restricted use makes it worth less than face value. Plus, if you want to spend £x in a shop then you don't normally need to buy a colleague's gift card.
I have started new jobs twice once in 2023 and once last year and before my first day on the job I got a text from the CEO of the company asking me to buy gift cards for them and they couldn’t do it themselves because they were in a meeting.
They said the CEO by name and texted my number. Of course it was a scam that had nothing to do with my CEO. I wonder how they got my number?
Did you confirm it was a scam? Primarily wondering if it's possible that the company itself contracted someone to do phishing test for new employees. I know there are plenty that do email version of this.
I would hope they don’t do that before I start using my personal number.
If someone did fall for it, the potential that your employees would spend real money that they wouldn’t get reimbursed for would definitely piss a lot of people off.
I’ve had these, they would have got the CEO from LinkedIn and my number is googleable from having resumes online. Someone is doing this reconnaissance on different companies.
of how thieves were abusing gift cards by imaging them in stores, waiting until purchased and "holding" value, then extracting that value with a little bit of cracking bad security
I would not have believed for a second if stores here in my location in the U.S. did not recently begin locking up gift cards in a cage. I thought the move was quite odd, until I remembered a story that I read (possibly here?) about specific types of imaging that could see the pin behind the scratch off part.
Originally I assumed it was due to customer education/fraud, however no additional signage is posted at the stores doing this. Second thought was people must think these cards are already activated, however there is tons of text stating these things are only activated at POS.
The retailers I mentioned are nationwide. However, they've only recently began to do this, and only in a few locations that I am aware of.
This guy purchased a gift card which turned out to be dodgy, and Apple locked his entire account. So there's definitely some kind of shenanigans possible with the current supply chain.
For the past year, single chinese tourists have travelled around the country emptying stored of nearly any kind of gift card. Its some kind of money laundering scheme I think? So recently stores in affected areas started locking up gift cards, though its hard to stop as buying all gift cards isnt really illegal
What is the core argument why a gift card would ever be used instead of cash?
I can see if someone didn’t have any money and had a card and wanted to try and sell or exchange it, otherwise? Cash might have some limitations but none that are worse than a gift card.
Cash requires in-person exchange. To use it electronically, you’d need to participate in the formal banking sector. Many people can’t or don’t.
Instead you can take your cash to any of a large number of retailers and acquire a card that sits outside the tight credit/debit-card regulations. That card, thanks to the wide reach of various multinational corporations, has broad (and cross-border) value and is suitable for electronic exchange. All that in exchange for a small(ish) tax (the price of the card plus whatever discount the recipient/exchange applies to its face value), and less recourse if you’re scammed or you screw up somehow.
Incidentally you might be interested in @patio’s description [0] of Japanese konbini (convenience store) payments. There, your remote payee gives you a transaction number. You take that number to your local convenience store and hand them the cash to complete the otherwise-electronic transaction.
> . Paysafe, for example, is a publicly traded company with thousands of employees, the constellation of regulatory supervision you’d expect, and a subsidiary Openbucks which is designed to give businesses the ability to embed Pay Us With A Cash Voucher in their websites/invoices/telephone collection workflows.
I always felt that gift cards are the underbelly of the economy. I don’t think that’s an accident, these things are great ways to move money and pay casual labor without the red flags that cash throws up these days.
One time I got a car detailed, and when I was paying at the end, I noticed that the employee was writing out a receipt and marking that I had paid with a gift card. I don’t remember if I was paying with cash or a credit card, but either way I figure some sort of tax evasion and/or money laundering scheme was happening.
Suspicious Activity Reports (SARs) and Currency Transaction Reports (CTRs). I’ve also noticed (perhaps this is not recent though) the max cash limit at some ATMs reduced from $500 to $400. If you purchase $1000 or more in USPS money orders, the rep will take a copy of your government identification.
How would gift cards circumvent this? Dollar for dollar I can only imagine a transaction getting more attention if done in gift cards, certainly one over 10k probably isn’t even possible
The general scamminess around gift cards is far too high from all angles.
Anyone asking you to pay them in gift cards is a problem. The gift card processors have all manner of ways to preserve the float by flagging "fraud" in order to suspend your gift card until you waste time and give them personal information. The company behind your gift card can go bankrupt (see: Bed, Bath and Beyond and Fry's). And, finally, as we found from Apple, even redeeming a card can cause you problems.
Give cash. In spite of some hoity-toity nitwits who consider cash to be gauche for gifts, at no point in my life have I ever be disappointed to be given cash.
> In spite of some hoity-toity nitwits who consider cash to be gauche for gifts, at no point in my life have I ever be disappointed to be given cash.
If you are one of those people afraid to give cash, here's what you do: go to the bank and ask for fresh bills. (You can also iron them yourself, I think.) I know of absolutely no one who would turn their nose at a fresh, crisp $100 bill, and it's not like $20s or $50s are much worse even if the $100 is king. They're just really satisfying when they're brand new.
> 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!
That’s where I stopped reading. The author seems more interested in being contrarian for clicks than in giving practical advice. AARP is right here: being asked to pay by gift card is a major red flag, and unless you know the company personally, it’s time to walk away.
Patrick very carefully declined to give examples of such legitimate yet debanked businesses. Presumably because they're all grey market stuff that sets off a whole other "wait, is that legal?" conversation.
I have never seen a legitimate business asking for payment in gift cards. I've encountered the traditional tradesmen offering discounts for cash, though.
Edit: I think he may actually be talking about businesses accepting payments in their own gift cards, which is so obvious that it's easy to forget. It's not a scam when Apple ask you to pay in Apple gift cards. It's just the only non scam such case.
I’m the kind of nerd who enjoys the surprising nitty gritty details, so I enjoyed the rest of the article and I’d recommend people read it.
But I agree with you: the AARP is 100% right to be running PSAs like this. I’d be curious to hear more about how a shadow economy like this would/would not help unbanked people, which he implies but did not describe at all. But it certainly doesn’t change the point that gift cards are an effective vehicle for fraud, and anytime someone asks to pay you (or especially you to pay them) in gift cards… your scam senses should tingle.
Agreed. It's more practical to tell seniors that all gift card requests are scams rather than teaching them to identify warning signs, since legitimate gift card payments are so rare.
Author works in payments industry which issues and accepts gift cards, benefits from the lack of consumer protections, and incidentally doesn’t make any revenue on cash payments.
I would call it "splitting hairs," which experts tend to do.
The practical reality is acknowledged at the end of the post.
Even if, technically speaking, using gift cards as a payments instrument is not a scam 100% of the time, anyone but a non-expert should behave as if it's 100%.
Is he an expert in the field of old people being scammed out of lots of money? Telling non tech-savvy people that it's ok to listen to the nice man on the phone and send him a lot of gift cards?
I am also an expert in the field of payments. The only thing that makes gift cards stand out from other transaction media is there are many fewer guardrails around them money movement wise.
I'd pretty much back up AARP on this one. Asking for payment by gift card should in the majority of cases put one on guard.
The world is full of people who, like you, seek any reason to not listen or read interesting things in favour of doing just about anything else. You don’t win a prize for being part of that group — at best, you saved as much time as it took you to write that comment. In exchange you are likely poorer for it intellectually because Patrick’s writing has an exceptionally high signal to noise ratio, and that signal is one most are not privy to.
At no point did the article claim AARP was in the wrong for running those ads. But had you kept reading you’d maybe have understood that wasn’t the point nor the premise in the first place.
The only legit use of a gift card is when you’re redeeming that gift card directly with the issuer. No business is going to request or require that you do that.
> very likely made it impossible for anyone at BigCo to reconstruct what happened to a particular gift card between checkout and most recent use.
Could I improve my own privacy posture by just buying myself gift cards, if I can't use cash? Or that's just pushing all the data that the store would get onto the gift card company?
Gift cards are one of the dumbest most brain-dead pieces of scam ever invented. With all kinds of restrictions that resemble "scrip" type payment systems. They only exist to increase a larger entities control over you.
Why take perfectly good cash and change it to something worse in every way? I cannot understand why so many people enthusiastically go out of their way to buy gift cards. Can you take my cash and convert it to something with the same function but with all kinds of restrictions and gotcha's? Sure no problem....
> As Bits about Money has frequently observed, people who write professionally about money—including professional advocates for financially vulnerable populations—often misunderstand alternative financial services, largely because those services are designed to serve a social class that professionals themselves do not belong to, rarely interact with directly, and do not habitually ask how they pay rent, utilities, or phone bills.
This resonated for me, and reminded me of the way I and my formally-banked and formally-employed colleagues sometimes struggle to wrap our minds around payday lending (sure looks like usury from the security and comfort of a formal banking relationship!), remittances, hawala, pawn shops, Cash App, gift card exchanges, video game economies… for all the normative thinking in the professional classes, people sure do develop a kaleidoscopic array of approaches to storing and transmitting value.
“Just sanction [whoever]” or “just debank [whoever]” sounds to certain circles like an appealing tool to have—the modern equivalent of exile—but I have to imagine it’s probably healthy that such a tactic is hard for a state actor to apply in a totally watertight kind of way.
The examples he gives are predominantly around giving people the option, while the scams are very much pushing a requirement.
If someone wants you to get a gift card to pay them, and won't take cash or credit? Scam. If you have a gift card already and someone's willing to accept it in lieu of cash? Probably no more likely to be a scam than any other vendor?
In any case, I think this is almost a willful misunderstanding. Not only does it attack the straw man of "no one ever gets legitimately paid in gift cards", but literally the first counterexample, Paysafecard, isn't a gift card!
At least 5% (rewards and inconvenience) but closer to 10-15% in my experience.
For a 20% discount on stores I use regularly I’ll get the gift card (usually buy $50 get $10 free).
They said the CEO by name and texted my number. Of course it was a scam that had nothing to do with my CEO. I wonder how they got my number?
If someone did fall for it, the potential that your employees would spend real money that they wouldn’t get reimbursed for would definitely piss a lot of people off.
Is This Australia’s Most Easily Hacked Gift Card? https://www.youtube.com/watch?v=oBarXDL23hs
of how thieves were abusing gift cards by imaging them in stores, waiting until purchased and "holding" value, then extracting that value with a little bit of cracking bad security
Originally I assumed it was due to customer education/fraud, however no additional signage is posted at the stores doing this. Second thought was people must think these cards are already activated, however there is tons of text stating these things are only activated at POS.
The retailers I mentioned are nationwide. However, they've only recently began to do this, and only in a few locations that I am aware of.
This guy purchased a gift card which turned out to be dodgy, and Apple locked his entire account. So there's definitely some kind of shenanigans possible with the current supply chain.
I can see if someone didn’t have any money and had a card and wanted to try and sell or exchange it, otherwise? Cash might have some limitations but none that are worse than a gift card.
Instead you can take your cash to any of a large number of retailers and acquire a card that sits outside the tight credit/debit-card regulations. That card, thanks to the wide reach of various multinational corporations, has broad (and cross-border) value and is suitable for electronic exchange. All that in exchange for a small(ish) tax (the price of the card plus whatever discount the recipient/exchange applies to its face value), and less recourse if you’re scammed or you screw up somehow.
Incidentally you might be interested in @patio’s description [0] of Japanese konbini (convenience store) payments. There, your remote payee gives you a transaction number. You take that number to your local convenience store and hand them the cash to complete the otherwise-electronic transaction.
[0] https://www.bitsaboutmoney.com/archive/payments-in-japan/#:~...
Fascinating footnote.
https://www.occ.treas.gov/topics/supervision-and-examination...
https://www.fincen.gov/system/files/shared/CTRPamphlet.pdf
"Don't buy gift cards. Full stop."
The general scamminess around gift cards is far too high from all angles.
Anyone asking you to pay them in gift cards is a problem. The gift card processors have all manner of ways to preserve the float by flagging "fraud" in order to suspend your gift card until you waste time and give them personal information. The company behind your gift card can go bankrupt (see: Bed, Bath and Beyond and Fry's). And, finally, as we found from Apple, even redeeming a card can cause you problems.
Give cash. In spite of some hoity-toity nitwits who consider cash to be gauche for gifts, at no point in my life have I ever be disappointed to be given cash.
If you are one of those people afraid to give cash, here's what you do: go to the bank and ask for fresh bills. (You can also iron them yourself, I think.) I know of absolutely no one who would turn their nose at a fresh, crisp $100 bill, and it's not like $20s or $50s are much worse even if the $100 is king. They're just really satisfying when they're brand new.
Trust me, no one will complain.
>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!
That’s where I stopped reading. The author seems more interested in being contrarian for clicks than in giving practical advice. AARP is right here: being asked to pay by gift card is a major red flag, and unless you know the company personally, it’s time to walk away.
I have never seen a legitimate business asking for payment in gift cards. I've encountered the traditional tradesmen offering discounts for cash, though.
Edit: I think he may actually be talking about businesses accepting payments in their own gift cards, which is so obvious that it's easy to forget. It's not a scam when Apple ask you to pay in Apple gift cards. It's just the only non scam such case.
But I agree with you: the AARP is 100% right to be running PSAs like this. I’d be curious to hear more about how a shadow economy like this would/would not help unbanked people, which he implies but did not describe at all. But it certainly doesn’t change the point that gift cards are an effective vehicle for fraud, and anytime someone asks to pay you (or especially you to pay them) in gift cards… your scam senses should tingle.
The practical reality is acknowledged at the end of the post.
Even if, technically speaking, using gift cards as a payments instrument is not a scam 100% of the time, anyone but a non-expert should behave as if it's 100%.
I'd pretty much back up AARP on this one. Asking for payment by gift card should in the majority of cases put one on guard.
At no point did the article claim AARP was in the wrong for running those ads. But had you kept reading you’d maybe have understood that wasn’t the point nor the premise in the first place.
AARP isn’t telling fibs. It’s giving sound advice.
The only legit use of a gift card is when you’re redeeming that gift card directly with the issuer. No business is going to request or require that you do that.
Could I improve my own privacy posture by just buying myself gift cards, if I can't use cash? Or that's just pushing all the data that the store would get onto the gift card company?
Why take perfectly good cash and change it to something worse in every way? I cannot understand why so many people enthusiastically go out of their way to buy gift cards. Can you take my cash and convert it to something with the same function but with all kinds of restrictions and gotcha's? Sure no problem....