Warning signs that caution consumers about gift card scams are starting to pop up in businesses as part of a new state law. The law, which took effect June 20, is aimed at protecting consumers from possible fraud and scams.

Requesting gift cards as payment has become increasingly popular with scammers because gift cards do not have the same protections as credit or debit cards. Money spent on a gift card is money you cannot get back.

“They are nearly impossible to trace so by providing them numbers on the back of that gift card it is just like giving them cash,” said New York Secretary of State Robert J. Rodriguez.

Team 12 Investigates found that some businesses in violation of the new law because they either did not know about the required signage or do not think gift card scams are an issue in their stores.

However, these types of scams are costing consumers hundreds of millions of dollars.

According to the FTC, people lost $125 million dollars to gift card fraud in 2020. The number jumped to $233 million in 2021. By 2022, victims reported losing $228 million and so far, this year, consumers lost $54 million to gift card fraud.

Gift card sellers are required to display these notices in an area that is visible to consumers and close to where the gift cards are displayed, or the sale occurs.

“The more signs that are put up, the more people will be aware of these scams,” said Edmund Lee, assistant general manager at Shop Rite.

Shop Rite in Plainview has added two signs that caution consumers about scams. The store also has a limit on the amount customers can put on a gift card to protect them from fraud.

“If somebody’s telling us that they need to pay someone in gift cards, that is also a red flag because that’s unusual,” Lee said. “It might make us question them and then they might have to reevaluate whether that’s the right thing for them to do or not.”

Gift card scams can take many forms, but are often phone calls targeting consumers, particularly the elderly and immigrants, stating that they owe money and payment is required by gift card.

Businesses may also create their own notice that includes the cautioning the purchaser about pre-paid card scams instructing the purchaser on what to do if they suspect they might be a potential victim of such a scam.