Gift card scams this holiday season: payment demands, drained cards and what to do

What's happened

Gift cards are a popular holiday present, and scammers have two ways to cash in on them. One is to talk you into paying them with gift cards. The other, called card draining, is to steal the money loaded onto a card you've bought as a gift.

On October 5, 2026, Michigan Governor Gretchen Whitmer signed bills that bring gift card fraud under the state's Organized Retail Crime Act, making it a felony with a maximum of five years in prison, a $5,000 fine and restitution. The Michigan Retailers Association, which worked with lawmakers, says many victims never report it because they assume they just got a dud card.

Maryland was the first state to tackle draining directly. Its Gift Card Scams Prevention Act, in effect since June 1, 2025, requires gift cards sold in stores to come in packaging that hides the numbers needed to redeem them.

Who's affected

Payment scams mostly hit people who are contacted out of the blue by someone posing as a government agency, tech support, a utility, a love interest or a relative in trouble. The Federal Trade Commission's latest report on older adults shows that people 60 and over reported losing about $139 million paid by gift card in 2025. Gift cards were the payment method they most often reported in tech support, romance, family impersonation and prize scams.

Card draining can hit anyone who buys a card from a store rack. A thief takes a card, records or swaps its redemption details, and puts it back. When you buy and load it, the thief spends the balance online, often before your gift is even opened.

How the payment scam works

The FTC says gift card scammers usually create urgency, tell you exactly which card to buy and where, sometimes across several stores, and may stay on the phone while you buy it. Then they ask for the card number and PIN, or a photo of the back. Once they have those, the money is gone, even though you still hold the card. Cards scammers often ask for include Google Play, Apple, Amazon, eBay and Target.

What it means in dollars: a worked example

This is an illustration, not a real case.

Linda buys three $100 cards for her grandchildren from a rack at a drugstore. One had been tampered with. Her grandson tries to use it on Christmas morning and finds a zero balance. The money was spent within hours of activation.

Because Linda kept the receipt and the card, she can report it to the card's issuer with the card number, purchase date, store and amount. Some issuers will refund a drained card, but it isn't guaranteed. Without the receipt, her chances are much lower.

What to do now

1. Never pay a bill or fee with a gift card. The FTC says anyone who tells you to pay with one is a scammer. Real agencies and businesses don't take payment that way.
2. Check the packaging before you buy. Make sure the package isn't opened, cut or resealed, and that the scratch-off strip covering the PIN is intact. If something looks wrong, pick another card and show the cashier.
3. Buy from behind the counter or directly from the brand. Cards kept at the register or bought on the brand's own website are harder to tamper with. Avoid auction sites, where cards may be fake or stolen.
4. Keep the receipt and photograph the card. You'll need the card number and proof of purchase to report a problem.
5. If you've paid a scammer, call the card company right away. Tell it the card was used in a scam and ask for a refund. For example, Apple is 1-800-275-2273, Target is 1-800-544-2943 and Walmart is 1-888-537-5503. Then report it at ReportFraud.ftc.gov.

FAQs

Do gift cards expire?

Under federal rules, the money on most store gift cards and prepaid gift cards can't expire for at least five years from when the card was issued or money was last loaded onto it. Some states give you longer, and some ban expiry dates altogether.

Can I get my money back if I paid a scammer with gift cards?

Sometimes. If you report it fast, the company may be able to freeze any money that hasn't been spent yet. The FTC says it's worth asking for a refund, whenever the scam happened.

Is an e-gift card safer than one from a rack?

Bought directly from the brand or a store's own website, a digital card isn't sitting on a shelf where it can be tampered with. But never send a digital card to someone who asked you to pay with one.

Sources: WKAR/Michigan Public Radio Network: new Michigan laws crack down on gift card fraud (October 5, 2026), AARP: new Maryland gift card law tackles fraud, FTC: Protecting Older Consumers 2025-2026, FTC: avoiding and reporting gift card scams, CFPB: Regulation E, section 1005.20 (gift cards)