Walmart saved millions from elder gift card scams

Technology developed by Walmart helped the retail giant identify and freeze nearly $4 million in gift cards that had been bought by thousands of primarily elderly victims at the direction of con artists who duped them, according to court records and the company.

The U.S. Department of Justice, after being notified by Walmart, recently seized that money through a federal court action in Arkansas. Now victims of the frauds can claim the money.

“It was impressive what they were able to do,” a DOJ official said about Walmart’s actions. The official spoke with CNBC on the condition that they not be identified.

The seizure of the swindled gift card funds is good news for older Americans and others who lost money in those schemes — if they become aware that they can claim their swindled money.

But the money that Walmart saved for those victims is just a small fraction of the millions of dollars annually lost in so-called imposter scams that rely on gift card purchases.

And the amount of money obtained by such schemes has spiked in recent years.

In the first nine months of 2021, consumers reported losing $148 million in frauds where gift cards were used to pay scammers, according to Federal Trade Commission data.

In comparison, $114 million were reported lost in gift card frauds for the entirety of 2020, the FTC says.

Gift card scams routinely involve callers, often from overseas, phoning victims and telling them they owe money for a debt or needed services, and that they should immediately go to a retail location to buy a gift card that can be used to pay off the purported obligation.

The caller claims to be the representative of a government agency, utility, or private company that insists on immediate payment.

“They create this false sense of urgency,” said the DOJ official.

“‘You need to resolve this now, or some sort of horrible thing is going to happen,'” the official said, giving an example of how scammers pressure their targets.

“It’s a very vulnerable position to be put in, and it’s very effective.”

A common trick is to claim to be a federal entity, such as the IRS.

“Government agencies are scary,” the official noted.

The official said people when they get such calls should “take a breath. Hopefully, that will give you time to think about it,” and not rush to satisfy the caller’s demand for payment.

Andy Mao, the DOJ’s elder justice initiative coordinator, noted that “federal agencies, like the Social Security Administration, Internal Revenue Service, or FBI, will never request payment through a gift card.”

“So if someone makes that request, you should hang up or immediately stop the communication and report to the FBI’s Internet Crime Complaint Center,” said Mao.

The FTC, on its website about gift card scams, notes: “Someone might ask you to pay for something by putting money on a gift card, like a Google Play or…