Eugene Buot shops for gift cards at a Home Depot in Merrifield, Va. Scammers posing as government officials are soliciting IRS payments via gift card, the Federal Trade Commission says. (Bill O'Leary/The Washington Post)
Columnist

Cash is not king when it comes to the latest round of scams.

The Federal Trade Commission has issued a warning to consumers that criminals are posing as government officials and asking people to use a gift card to pay a bogus tax bill or get a new Medicare card.

This type of crime is adding up to big bucks. The FTC said victims reported losing $20 million to such fraud in 2015. In just the first three quarters of this year, the losses have been $53 million.

“We really wanted to sound the alarm,” said Monica Vaca, associate director of the FTC’s Division of Consumer Response and Operations. “If people get a call from somebody who is scaring them about something and they've got to take immediate action to avoid some horrible thing happening to them like being fined or arrested, and there’s a demand to be paid by gift card, boy is that ever a red flag. That call is a scam, and people should hang up.”

The attention to gift cards is part of the FTC’s new online initiative to dig through the complaint data they receive and spotlight certain trends. Millions of consumers file complaints to the FTC every year about being ripped off. This gives the agency an insight into the latest tricks that con artists use to swindle people.

The number of consumers reporting that "impostor” scammers have demanded to be paid with gift cards or reloadable cards has skyrocketed, the FTC said in its first data snapshot.

In 2015, just 7 percent of people who identified their payment method as part of a fraud report to the FTC said they had used a gift card. But so far this year, 26 percent of such reports indicated that a gift card was used to pay a suspected impostor. That’s a 270 percent increase.

Impostor scams come in various forms. People are getting calls from criminals claiming that a loved one is in trouble and needs money. In one scheme, a caller may claim you have to pay a fee to get your new Medicare card. Not true — Medicare cards are free.

The scam might involve someone pretending to be from a government agency such as the IRS. Just to be clear: The IRS would never request payment via a gift card.

The IRS scam is particularly heinous. Con artists, who often target seniors, scare people into thinking they have an overdue tax bill and that if they don’t pay up right way, they could be arrested.

From January to September of this year, 54 percent of government-impostor scams involved the use of a gift card or reloadable payment card, according to the FTC. The next most common method of payment was a wire transfer, at 16 percent. In just 5 percent of the reported cases, the con artists ask for cash.

Vaca said Google Play and iTunes cards were the top two types of gift cards victims were asked to buy. Forty-two percent of people who said they paid a scammer using a gift or reload card were instructed to pay in iTunes (23.7 percent) or Google Play (18.3 percent) cards.

There are three reasons gift cards are increasingly the con artist’s preferred payment method, Vaca said. The transaction is largely irreversible for the consumer. It’s quick money, and the scammer can remain anonymous.

Vaca said that victims are often told to go to a major retail store such as Target or Walmart and buy gift cards. Sometimes the scammers direct them to go to multiple stores so as not to raise an alarm with an alert cashier who may question why so many high-value gift cards are being purchased.

Victims are then instructed to scratch off the back of the cards and to relay the activation codes.

The FTC is encouraging consumers to contact retailers when they’ve fallen for a scam using a particular gift card. On ftc.gov search for “Paying scammers with gift cards.” You’ll find contact information for the most popular retailers used in the scams — Amazon, iTunes and Google Play.