WHEN GIFT CARDS GO WRONG

Gift cards are big business. It’s estimated that the gift card market was worth £7 billion in 2024, and that’s predicted to rise to nearly £9 billion in 2025. Retailers love gift cards because millions of pounds go unspent every year when cards expire or because we have forgotten to use them. Gift cards might be an easy solution for those hard-to-buy-for family members, but they can be risky. If a firm goes bust, the gift card is worthless.

Gift cards are also a growing target for scammers. A common scam involves fraudsters draining the balance before the intended recipient can use it. Some fraud stems from internal theft, where staff note down codes before the cards are sold. In other cases, scammers target self-checkouts and tamper with codes and packaging. And because many retailers allow gift cards to be spent online or over the phone using just the card number and PIN via e-cards, the physical card isn’t always required. That’s why stolen codes can be spent quickly.

The good news is that you are protected by the Consumer Rights Act 2015. This states that goods and services must be fit for purpose, as described, satisfactory quality and last a reasonable length of time.

If the card has been activated and fraudulently used, that requirement has not been met so the retailer has a duty to replace it or refund you.

If you received a gift card that has been drained by scammers, you will need to contact the person who bought it for you and explain what’s happened, so they can contact the retailer. You will need to be able to prove the gift card was used fraudulently, so find out where the money was spent on the card and sign a disclosure confirming you did not spend it.

You need to push hard and cite ‘breach of contract’ under the Consumer Rights Act 2015 and say that the gift card sold was not fit for purpose. Keep receipts and proof of purchase and alert the retailer or card issuer immediately.

Tell the retailer that if they refuse to replace the gift card, you will make a chargeback with your bank or credit card provider for a ‘breach of contract’ under the Consumer Rights Act 2015 to reverse and dispute the transaction.

My advice…

Don’t buy gift cards at all – give cash. If a firm goes bust, you lose your money.

If you buy a gift card, buy from a reputable retailer and check that the security strip has not been tampered with, especially if buying from open shelves in shops.

Keep your receipt separate from the gift card and never share PINs or codes.

Check the terms and conditions carefully. Some cards incur a monthly inactivity fee and drain the value without you knowing.

Many cards also have short expiry dates, so treat it like cash and spend it quickly.