How Walmart Stopped A $4 Million Gift Card Scam
Walmart is being touted as a hero after singlehandedly stopping a $4 million gift card scam.
This article is more than 2 years old
The word hero isn’t a term that one would expect to be associated with Walmart. On the contrary, the big box retail behemoth has a reputation that is about as far from heroic as one could get. However, despite the company’s past blemishes, in one instance Walmart really did save the day. CNBC reported that Walmart successfully foiled a $4 million gift card scam that was primarily targeting elderly folk.
Walmart was able to identify and seize the swindled gift card scam funds via a proprietary anti-fraud technology that the company had developed. After seizing the monies Walmart notified the Department of Justice who they then entrusted the recovered capital to. An official at the DOJ told CNBC that what Walmart accomplished, in this case, was very “impressive.”
While it’s encouraging to know that the $4 million in funds that Walmart was able to recover will eventually be returned to those who were conned out of their cash, the incident is reflective of a larger problem. The Federal Trade Commission outlined that in the first three months of 2021 $148 million in gift card scams had been reported by consumers who had been duped out of their money. That figure is exceedingly concerning, especially when comparing it to the $114 million that was siphoned via gift card scams over the course of the entire year in 2020. Hence, while $4 million dollars in funds were saved thanks to Walmart, that same $4 million looks like a drop in the bucket when stacked up against the overarching problem as a whole.
A DOJ official explained that these gift card scams, like the one Walmart thwarted, are so prevalent because they are so effective. The DOJ official outlined how such scams work. They explained that scammers, typically pose as someone from a government agency like the IRS, call up individuals and use scare tactics and their seeming position of power into making people believe that they have to satisfy a debt with that high-profile government agency. The scammer then instructs the individual to purchase a gift card as a way to rectify the matter. While paying off a government debt with a gift card may seem illogical, the DOJ highlighted that the ploy often works because “Government agencies are scary.” The official continued, “It’s a very vulnerable position to be put in, and it’s very effective.”
Scammers use gift card scams as means to con people into giving them money because gift cards offer anonymity that other forms of payments do not. This serves the scammer because it means that there is less of a chance they will be caught. On the flip side, it also means the victim of the scam will likely never see the money they lost again. “It’s great what happened in the Arkansas case [with Walmart], but that’s the exception, not the rule,” the DOJ official disclosed via CNBC.
Overall, it’s good news that the victims involved in the Walmart gift card scam will have the opportunity to reclaim their lost money. The incident also serves as a reminder for individuals, particularly those over the age of 60, to be wary of potential scammer phone calls. The Federal Trade Commission asserted “No real business or government agency will ever insist you pay them with a gift card. Anyone who demands to be paid with a gift card is a scammer.” Should you receive a call from an individual claiming to be involved with a government agency that is asking to be paid via gift card you should immediately terminate the call.
