July 12, 2013

Prepaid money cards are useful for crooks

As the popularity of prepaid money cards has risen, so have the number of reported scams associated with them.

As the popularity of prepaid money cards has risen, so have the number of reported scams associated with them.

Green Dot MoneyPak cards can be a convenient way to pay bills and add money to PayPal accounts. But the cards are now among the favorite tools used by scammers seeking access to your money.

Fortunately, there are a few rules that card users can follow to protect themselves from the unscrupulous.

First, let’s look at some examples of the schemes being used by fraudsters lately.

The lottery or sweepstakes scam

In this variation on an old theme, a caller or e-mailer will notify you that you are the lucky winner of a fabulous prize in a lottery or sweepstakes.

Only problem is, you first need to pay a fee in order to claim your money or merchandise. But, no problem, they say: You can use a MoneyPak card to quickly and conveniently pay the fee and then receive your winnings. All you have to do is go purchase the card for whatever amount they specify, then give them the 14-digit code found on the back of the card.

At this point the scammer can transfer your money onto their own card. Your prize? A very painful lesson from the school of hard knocks.

The online loan scam

One recently reported scam involved an online “quick loan” scheme in which the borrower was told to load more than $100 onto a prepaid debit card with the assurance that the loan company wouldn’t take the money off the card. Instead, they claimed to only be looking for proof that the applicant could make payments on the loan in the future. The loan company did end up taking her money and fraudulently claimed that the Better Business Bureau had put a hold on the funds, telling her she would need to deposit yet more onto the card.

The BBB, of course, does not and could not engage in such a practice. The loan applicant had fallen victim to a variation in the old advance-fee scam. The applicant’s money was not recoverable.

The ransom scam

It’s bad enough when crooks use the name of the BBB in their schemes. But another popular prepaid debit card scam goes so far as to use the name of the FBI in order to steal from victims.

In this scheme malware is installed on a victim’s computer. The program locks up their computer and displays a message purporting to be from the FBI. The message is formatted with official-looking FBI logos and letterhead, and claims the computer owner must pay a fine or else be subjected to criminal charges for “violating federal copyright laws” and accessing child pornography.

The user is told to load $450 onto a Green Dot MoneyPak card and give the card’s code to the scammer. Only a technology professional can remove the malware from the computer.

Tips for avoiding prepaid debit card scams

• Never give your MoneyPak card number or receipt information to someone you do not know.
• Refuse any offer that requests you to buy a MoneyPak card and share the number by e-mail or phone.
• Avoid websites and ads that request payment by MoneyPak card.
• Never pay advance fees or taxes to receive a prize that you have “won” with a MoneyPak card.
• Remember that advance-fee loans are illegal.
• Treat MoneyPak cards exactly like cash. Remember that transactions involving them cannot be reversed.
• To use your MoneyPak with PayPal or eBay, transfer the money to your PayPal account before paying the merchant. Don’t send them the card’s number.

For more information about safeguarding your Green Dot MoneyPak card, visit the Green Dot Corporation’s website at

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