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May 31, 2023


Effective June 20, 2023, New Law Requires Businesses to Post a Notice Warning Consumers About Potential Gift Card Fraud

New York Secretary of State Robert J. Rodriguez today reminded businesses of a new law to protect consumers from potential gift card scams. Effective June 20, 2023, all businesses selling gift cards must display a notice at or near where any gift card or gift certificate is displayed or sold to caution consumers about gift card fraud. Requesting gift cards as payment has become increasingly popular with scammers as funds are nearly impossible to trace. According to the Federal Trade Commission in 2022, nearly 65,000 consumers filed a complaint related to gift card scams, equating to a total loss of $228.3 million. More information is available here.

Video of Secretary Rodriguez’s remarks is available here.

Photos are available here.

“With the number of gift card scams on the rise, it’s more important than ever to educate consumers so they know that gift cards should only be used for gifts, not to make payments,” said New York Secretary of State Robert J. Rodriguez. “This new law requiring warning signage where gift cards are displayed or sold will help to reduce the success rate of these scammers and protect consumers’ hard-earned money.”

Mona Golub, VP Public Relations & Consumer Services for Price Chopper/Market 32 said, “Given the regularity with which customers shop our stores for vital goods and services and the trust they place in us to help them take care of themselves and their families, we are pleased to work in partnership with the State of New York to protect consumers from fraud. With signage at every register in the store where gift cards can be purchased, we are well-positioned to help deliver this important message.”

Senator Kevin Thomas said, “The increase in scammers using gift cards as a mechanism to defraud consumers has grown, which is why I introduced legislation earlier this year to require businesses to display in-store warnings about potential gift card scams. I am happy to see the Department of State taking steps to implement these guidelines to protect New Yorkers from becoming potential victims of financial fraud.”

Assemblywoman Amy Paulin said, “Gift cards are an increasingly prevalent way for con artists to steal from people. As soon as someone tells you to pay them with a gift card, you should immediately suspect that it’s a scam. Education at the point of purchase is an effective way of warning people about how gift cards are used by scammers, which led me to author this bill. I commend Governor Hochul for taking this step to help protect New Yorkers from gift card scams.”

Claire Rosenzweig, President and CEO of Metro New York's Better Business Bureau®, said, “Over the years, we have observed many kinds of fraud where payment by gift card is demanded by the scammers and have even published an investigative study report about this problem. We are gratified to see that New York will now require warning notices to be placed at the point-of-purchase for gift cards; consumers need to be reminded about the potential dangers.”

A rush transcript of Secretary Rodriguez’s remarks is available below:

Hello everyone and thank you for being here. I'm Secretary of State Robert Rodriguez. And I want to thank our host today, Mona Golub, the Vice President of Public Relations and Consumer Services for Price Chopper/Market 32. It's great to be here in Clifton Park. I also want to recognize my colleagues in government - Assemblymember Amy Paulin and Senator Kevin Thomas for sponsoring the legislation that we're talking about here today. And when we're in their home districts, I also like to acknowledge the home team, Senator Jim Tedisco and Assemblymember Mary Beth Walsh, who represent this district and are doing the people's work on behalf of Governor Hochul.

We are here today to support New York State businesses and to protect consumers statewide. So I've been in this job a little bit over a year, and I know that many people still don't exactly know what the Department of State does. So we are charged with many things, but just a few things that I'd like to name. First, we assist new American services and workforce development. We help individuals start a business with our entrepreneur program. We license nearly 40 different occupations, many of which are anchors in our community, including our real estate brokers and salespeople, beauty enhancement, barbers and security guards to assist communities all across the state by investing in them with our flagship investment program, the Downtown Revitalization Initiative, which brings our downtowns back to life.

And we oversee consumer protection. The Consumer Protection Division is charged with educating consumers to be smart shoppers and to know their rights and to make informed decisions. And we help businesses to be able to understand the laws and follow those rules so that everyone is working from the same place on the same playing field. And that's why we're here today.

Specifically, we're talking about gift cards and scammers. So we know that for many of you, we struggle to find the perfect gift, present company included. And gift cards can be a very easy option to be able to solve that dilemma. But there's the flip side. According to the Federal Trade Commission, nearly 65,000 consumers filed complaints last year related to gift card scams, and those have accounted for a total loss of almost $228.3 million.

The number of gift card scams only continues to rise. And that's why it's more important than ever to educate our consumers so that they know that gift cards should only be used for gifts, not for payments, but requesting gift cards as payment has been an increasingly popular way for scammers to take people's hard-earned money because they are nearly impossible to trace.

So by providing those numbers on the back of a gift card, it is just like giving them cash. So whether the victims give those numbers over in a photo or a text message, they're essentially handing money over to scammers that eventually find their way into foreign banks and accounts. Now, we can't trace those. And that's the difference between a gift card and a credit and a debit card. When you use a credit and debit card, we know where it's going. And we're able to speak with that institution to get the money back if possible.

And I know we say all scams are so easy to spot, but sometimes they aren't. Let me give you a few examples.

First example, a consumer purchased a puppy from a breeder advertising on Facebook marketplace. The puppy was over $2,000 plus added fees and expenses, but the breeder said they didn't take credit cards. So they told the consumer to buy visa gift cards and provide them with the numbers and the pins. And then the breeder disappeared, and the consumer was now out $3,700. And the worst part, no puppy.

I'll give you another example. A consumer received a Facebook message from a friend stating that they were stranded with a flat tire, and they needed money for the tow truck and a new tire. And the friend asked if they could purchase a $500 gift card for them and that they would pay the consumer back. Helping a friend out, it's what any one of us would do. The consumer purchased the gift card, provided the number and the pin and then later found out that the friend's Facebook account had been hacked and that the request for $500 was a scam. And there he or she is out $500.

The third example, a senior citizen received an email that looked to be from their bank to authorize a large cash transfer to an overseas account. The gentleman called the number and the email was told that the only way to stop that transfer from happening was to overdraft his account, basically bring his account to zero funds, so there would be no funds to transfer to this foreign account. He was told to do this by purchasing gift cards for the amount that he had in his checking account, and then he'd be put right back in the alleged bank so that he would process the gift cards and then immediately place those dollars back. He did as he was instructed, purchased the gift cards, gave the number. And you see where this is going, that yes, out $7,200 because of a scam.

So sadly, gift cards scams can take many forms. Sometimes they are phone calls coming in. So your cell phone, sometimes they’re emails, sometimes they're text messages that are targeting consumers, in particular vulnerable populations, including our elderly and immigrants, stating that they owe money where payment is required by a gift card.

So clearly there's a problem. So how can we fix that? One of the things that we clearly did was we changed the laws and we empower consumers with that knowledge. And that's why Governor Hochul signed legislation requiring businesses that sell gift cards to place signage in their stores, alerting the customers of these kind of scams. So starting on June 20th, signs like these must be clearly posted at or near a gift card display or at the register. And this will help increase public awareness of the scam and provide guidance to vulnerable populations, to look at this and think twice before purchasing their gift card.

But we need your help. We need the help of the media to help spread the word. We're doing our part as well in addition to this event and the press release, we're sending out communications to our 450,000 licensees and small business owners to let them know about this new law that's taking effect. And any business who sells gift cards are required to display these notices by June 20th. And I'm proud to say that several businesses, including this one right here, has proactively contacted us and have begun to put signage to be ahead of the game and to protect their customers. So we applaud those businesses. We applaud Market 32 and Price Chopper.

And finally, if you're a consumer and someone asks you to pay them with a gift card, that's a red flag. Please don't do that. And if you think you might be getting scammed, let us know. Report it to the Department of State's Consumer Protection Helpline at 1-800-697-1220. And with that, thank you all for being here. Now, I'd like to introduce Mona Golub of Price Chopper/Market 32 to say a few words on this legislation and this change.

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