The holidays might have brought you many gifts you wanted, and some you didn’t.
For consumers who don’t want to buy the wrong gift, a prepaid card linked to your favorite retailer, say Target or Amazon, might be loaded with a limited amount of cash. The recipient is supposed to use it like a debit card.
Most Americans have given or received gift cards. But consumers beware – there are pitfalls to these cards.
First- if you lose the card, generally you are out of luck, depending on the terms of the contract.
Then there the problem of gift cards that sit unused. It’s called “spillage” and that is something the retailer counts on. Spillage accounts for an estimated $1 billion in unused dollars every year, resulting in a gift to the retailer, reports Barron’s.
Watch for fees that may apply to a gift card sold by a financial institution. The card can have an activation or inactivity fee that degrades their value.
If you have an unwanted gift card you can trade it for one you do want. eBay’s CardCash app will allow a $100 Walmart gift card to be traded for a $93 eBay gift card.
Beware of the latest scam involving the iTunes gift cards.
An iTunes card purchased at CVS, might result in a call asking the recipient to put cash on the card to pay taxes or help someone in need.
The scammer might say they have a CP2000 letter that requests a tax payment be made to the Internal Revenue System (IRS).
CVS says never provide your PIN number to someone you don’t know.
The Treasury Inspector General for Tax Administration has recently issued a warning to taxpayers about people who call you claiming to be from the IRS or Treasury Department and urging you to use that gift card to pay your tax bill.
The warning says “The IRS WILL NOT contact you by phone with threats for non-payment of tax liability.”
The IRS will never require an iTunes or Amazon gift card or credit card for tax payment. It’s a scam also seen on Green Dot Prepaid Cards, Money Pak Prepaid, Reloadit Prepaid, among others.
If you receive a call from the IRS allegedly to settle a tax bill, the government warning says just hang up.
Dozens of consumers have been scammed this way, at one point to a tune of 150 reports a week. In October, the U.S. Department of Justice indicted dozens of alleged scammers based in the U.S. and five call centers in India.
Prepare to be especially vigilant during the upcoming tax filing season.