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How to recognize and avoid gift card scams

At TD, we make every effort to secure your personal information and are committed to ensuring our customers have access to the best information available to help them avoid falling prey to fraud and identity theft. Through awareness, financial education, and good online habits, you can significantly reduce your risk of fraud and identity theft. Below is one of many informational pieces available on TD Stories designed to help you learn to spot and avoid potential scams and fraud.

If you are a TD customer and are worried that you have become the victim of fraud, please contact TD by phone, through EasyWeb, the TD App, or at a TD Branch.

Gift cards scams are becoming increasingly common. Whether it’s a fraudster posing as your distressed grandchild, as an employee from the Canadian Revenue Agency (CRA), or as someone from your financial institution, there’s no shortage of bad players trying to con Canadians out of their money.

That’s why it's a good idea to understand the different types of gift card scams happening right now and learn how to spot some of the warning signs. We spoke to Adrienne Vickery, Associate Vice President, Canadian Fraud Management at TD, about what you should know about gift card scams and how you can protect yourself and your loved ones from falling victim to this kind of fraud.

The reason why scammers request funds via gift cards is because they are incredibly hard to track. Once a gift card number and PIN is shared with a fraudster, they can access the funds on the card – and it’s difficult to know the identity of who cashed it.

“Gift cards are what we call an ‘easy depletion method,’" Vickery said. "They’re a way for scammers to get money that’s not easily trackable.”

Types of gift card scams in Canada

The first step towards avoiding falling victim to a gift card scam is understanding some of the various types of cons circulating. Vickery said that while a gift card scam can take many different forms, some of the more common ones are:

Bank investigator gift card scams: You might receive a phone call from a fraudster posing as an employee of your bank saying your account has been compromised and that they need your help with the investigation. To encourage your participation, the scammer will ask for your personal banking information and say you will be compensated for the incident. Then, they might make deposits into your account through fraudulent cheques or cash advances from your own credit card without you knowing. The fraudster will then ask for the money to be sent back to them, claiming it will be inspected as evidence in their investigation. In some cases, the scammer will ask you to buy gift cards using the money they put into your account and ask that you give them the numbers on the back of the gift card. Once the scammer has the gift card numbers, they can access the funds on the card. (You can read more about the scam in this TD Stories article.)
CRA gift card scams: There are many ways fraudsters impersonate employees of the CRA and try to extract funds from unknowing victims. But one scam is the CRA gift card scam where fraudsters call and pretend to be an agent from the CRA, often calling from a fake number. The fraudster might tell you that you owe money to the tax agency and demand your social insurance number and a payment in the form of gift cards. (You can read more about CRA gift card scams on the CRA’s website here and in this TD Stories article.)
Grandparent gift card scams: The grandparent scam involves the fraudster calling a senior and pretending to be that person's grandchild. When the grandparent receives the phone call from the fraudster posing as the “grandchild,” the fraudster ensures they sound like they are in distress, claiming they need money for some type of emergency. The scammer will often ask the grandparent not to tell anyone about the trouble they’re in, and to send money via gift card or other means. (You can read more about the grandparent scam in this TD Stories article.)
Lottery gift card scams: You might receive a call saying you’ve won a lottery prize, but to receive that prize, you need to pay a fee. Fraudsters might say this fee covers “taxes,” or “shipping and handling” charges, and ask for the fee to be paid via gift card. Once the “fee” is paid, the victim never receives their prize.
Romance gift card scams: There are many forms of romance scams, but they often all include a fraudster posing as a romantic partner or love interest, before eventually asking their target for money. These scammers often build relationships over time, either via social media, the phone or email, and play on emotions. Then, once they feel confident, they tell their victim they’re experiencing an emergency and need money in the form of gift cards.
Barcode gift card scams: Some fraudsters buy gift cards from retailers to take them home and put their own, phony barcodes on them, and then return to the retailer or got to another store and hang them back up, ready for purchase by an unsuspecting victim. When the victim pays for the card in-store, the funds are activated on the scammer's card and the victim has purchased an empty card.

Types of gift card scams in Canada

Bank investigator gift card scams: You might receive a phone call from a fraudster posing as an employee of your bank saying your account has been compromised and that they need your help with the investigation. To encourage your participation, the scammer will ask for your personal banking information and say you will be compensated for the incident. Then, they might make deposits into your account through fraudulent cheques or cash advances from your own credit card without you knowing. The fraudster will then ask for the money to be sent back to them, claiming it will be inspected as evidence in their investigation. In some cases, the scammer will ask you to buy gift cards using the money they put into your account and ask that you give them the numbers on the back of the gift card. Once the scammer has the gift card numbers, they can access the funds on the card. (You can read more about the scam in this TD Stories article.)
CRA gift card scams: There are many ways fraudsters impersonate employees of the CRA and try to extract funds from unknowing victims. But one scam is the CRA gift card scam where fraudsters call and pretend to be an agent from the CRA, often calling from a fake number. The fraudster might tell you that you owe money to the tax agency and demand your social insurance number and a payment in the form of gift cards. (You can read more about CRA gift card scams on the CRA’s website here and in this TD Stories article.)
Grandparent gift card scams: The grandparent scam involves the fraudster calling a senior and pretending to be that person's grandchild. When the grandparent receives the phone call from the fraudster posing as the “grandchild,” the fraudster ensures they sound like they are in distress, claiming they need money for some type of emergency. The scammer will often ask the grandparent not to tell anyone about the trouble they’re in, and to send money via gift card or other means. (You can read more about the grandparent scam in this TD Stories article.)
Lottery gift card scams: You might receive a call saying you’ve won a lottery prize, but to receive that prize, you need to pay a fee. Fraudsters might say this fee covers “taxes,” or “shipping and handling” charges, and ask for the fee to be paid via gift card. Once the “fee” is paid, the victim never receives their prize.
Romance gift card scams: There are many forms of romance scams, but they often all include a fraudster posing as a romantic partner or love interest, before eventually asking their target for money. These scammers often build relationships over time, either via social media, the phone or email, and play on emotions. Then, once they feel confident, they tell their victim they’re experiencing an emergency and need money in the form of gift cards.
Barcode gift card scams: Some fraudsters buy gift cards from retailers to take them home and put their own, phony barcodes on them, and then return to the retailer or got to another store and hang them back up, ready for purchase by an unsuspecting victim. When the victim pays for the card in-store, the funds are activated on the scammer's card and the victim has purchased an empty card.

Some ways to spot a gift card scam

One of the most tell-tale signs of a gift card scam is a sense of urgency. If you’re being told that funds need to be sent immediately, or that a loved one is in trouble and needs your help or there will be consequences, chances are you’re being scammed.

“The scammer tries to convince the person to buy gift cards for an urgent situation, so the person doesn't have time to talk to their friends and family about the situation,” Vickery said. “They think they need to act now and can get caught up in the moment.”

Another red flag is the fact that a purported organization is asking to be paid in gift cards in the first place. No legitimate organization, such as the CRA or a financial institution, will ever ask to be paid in gift cards. No reputable charity or business will demand payment in gift cards, either.

What to do if you think you’ve been scammed

Many people may feel embarrassed if they think they’ve been scammed – especially if they’ve sent a scammer a large sum of money via gift cards. But it’s important to report the suspected scam as soon as possible for a chance at getting reimbursed, and to help prevent other people from falling victim to a similar con.

Vickery also said that the victim might still be able to recover their funds by reaching out to the gift card issuer (for example, Visa, and not the 3rd party retailer where the card was purchased) to alert them of the fraud. In the chance the money hasn’t been cashed yet, they might be able to freeze the funds on the card provided the fraudster has not already cashed the card which they usually do immediately upon receipt of the cards. It’s also critical to alert your financial institution, local law enforcement and credit bureaus, such as Equifax and Transunion, if you have shared any financial information or personal information, like your SIN, with a fraudster.

The Canadian Anti-Fraud Centre tracks the scams that are happening across Canada and encourages people to report any suspected fraud. In 2023, the Centre estimates that Canadians lost $554 million to fraud¹.

Sharing stories and red flags

In addition to reporting the scam to law enforcement, if you can, you should consider talking about your experience, or the experience of a loved one who was tricked, with your friends, family and neighbours because it can help alert other people to the existence of these gift card scams. The more awareness people have about gift card scams and some of their warning signs, the less likely they could fall victim to them. And even if you haven’t been scammed, talking to your friends and family — especially those who are less tech savvy — about red flags arms them with knowledge. After all, many fraudsters prey on people’s vulnerabilities and lack of knowledge about scams.

Vickery said when in doubt, talk to someone you trust, like a loved one, about any suspicious calls, emails or text messages and remember that no credible organization or institution such as a bank, a charity or a government agency, will ever ask for payment in the form of gift cards.
“If something doesn’t seem right, then it probably isn’t,” she said.

For more information and articles on safety and security, visit our TD Advice Hub.

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¹ https://antifraudcentre-centreantifraude.ca/index-eng.htm

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