Gift card sales rise, as does fraud

Consumers, concerned that supply chain challenges will crimp holiday shopping plans, are expected to purchase more gift cards this year than previously. That's a key takeaway from survey results just released by Fiserv. In a related development, the Federal Trade Commission reported that consumers lost at least $148 million to gift card scams in the first nine months of the year. That's nearly a 28 percent increase over the $116 million in total losses reported during all of 2020.

Fiserv: gift cards address supply chain worries

Fiserv surveyed 1,000 consumers on their holiday shopping plans and found 55 percent were concerned about delivery delays and out-of-stock items. Even more, 70 percent, were concerned supply chain issues would impact heir ability to purchase electronics. However, one third (33 percent) of those surveyed said that if the gift item they wanted to purchase were not available, they'd purchase a gift card instead.

Following are additional insights from Fiserv's latest Gift Card Gauge:

• 75 percent of surveyed consumers plan to give at least one gift card this holiday season
• 29 percent plan on purchasing more gift cards this year than in past holiday seasons
• 44 percent would grab a gift card as a last-minute gift
• 65 percent plan to make their gift card purchases at brick-and-mortar stores
• A majority of those surveyed (81 percent) plan to spend less than $50 on each gift card they purchase

FTC: 40,000 scams and counting

Fiserv's report is just the latest in a string highlighting the growing consumer appeal of gift cards. Gift card giant Blackhawk Network reported that 83 percent of consumers it surveyed this fall reported wanting to give at least one gift card in lieu of a physical gift this year. Surveyed shoppers said they planned to purchase 15 gift cards, on average, dedicating 41 percent of their holiday gifting budgets, or $272 on average, to gift cards this holiday season.

Not all gift card purchases will bring holiday cheer, however. According to the FTC's data, nearly 40,000 consumers reported scams in the first three quarters of the year where gift cards were used as the form of payment. Combined, those consumers lost $148 million to the scams, the FTC said.

One noteworthy insight from the FTC's data: scammers really like Target stores. Target gift cards accounted for the largest share of payments to scammers—$35 million—and the median amount lost when consumers paid scammers with Target cards—$2,500—was higher than any other brand. Nearly a third of consumers scammed into purchasing Target gift cards reported losses of $5,000, or more, according to the FTC's data.

Scammers also directed consumers to purchase gift cards—regardless of brand—at a Target more often than any other location, the agency noted.

Other gift card brands used to defraud consumers during the first nine months of the year, according to consumer complaints filed with the FTC, included:

• Google Play ($17 million)
• Apple ($16 million)
• eBay ($10 million)
• Walmart ($6 million)

Both the number of scams involving gift card payments and total losses have been on a steady incline since 2018, the FTC said. For example, just 8 percent of consumers reported paying scammers $5,000 or more in gift cards in 2018; so far this year 14 percent of complaints to the FTC involved gift card scam losses of $5,000, or more. Over that same period, median reported losses from gift-card related scams rose from $700 to $1,000.

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