Personal Finance

5 holiday scams to watch out for this season

Your debit and credit cards get a workout at this time of year. Plastic may be more practical than cash when it comes to shopping for holiday gifts but swiping the magnetic strip at the mall, supermarket and post office or using cards at online retailers puts you at risk for scams.

"Scammers don't take the holidays off," notes Nicole Vincent, consumer education specialist for the Federal Trade Commission.

Keep the season merry and bright by steering clear of these five popular holiday scams:

1. Popular present scams: Remember the Tickle Me Elmo frenzy? So do scammers.

Preying on your desperation to score the hottest holiday presents, scammers set up websites and social media ads advertising a fake supply of popular items. Instead of mailing the gifts, scammers steal your credit card information and all you end up with is a statement filled with unauthorized charges.

"Scammers follow the headlines; they know what the hot gift items are and will take advantage of your desire to buy them for Christmas," says Vincent.

If the deal sounds too good to be true, it probably is.

"If you don't recognize the [retailer], search the company name with terms like 'complaint' and 'scam' to see if it's legitimate," Vincent advises. "Many times, you'll see a lot of negative reviews if the company offering the hot gift item is a scammer."

2. Phishing schemes: During the holidays, you'll likely receive multiple e-mails that appear to be from FedEx, UPS or the United States Postal Service (USPS) asking you to fill out forms (including financial details) to have holiday parcels delivered.

"You can be 100 percent certain that [these] e-mails are not from the Postal Service; it's not how we communicate with our customers," notes Margaret Williams, national public information representative for the United States Postal Inspection Service.

If there is a package waiting for you at the post office, USPS will leave a notice in your mailbox; FedEx and UPS will also leave notices at your home.

You may also be receiving phony emails alerting you that the direct deposit payments you were expecting were rejected. It's tempting to click on the link and enter financial information to ensure your holiday money lands in your account but Colleen Morrison, senior director of communications for NACHA, the Electronics Payment Association, warns that it's a scam.

"Any e-mails that appear to be from NACHA are fraudulent," she says.

3. Gift card cons: The popularity of gift cards -- 62 percent of Americans plan to purchase gift cards this season, according to a Consumer Reports' poll -- has con artists coming up with clever ways to take advantage of consumers.

Counterfeit or fraudulent gift cards are often sold on auction websites; scammers also use stolen credit cards to purchase gift cards and sell them for cash.

Some scammers inflate the value of the gift cards they are selling, duping consumers into spending more than the card is worth. In fact, The Better Business Bureau logged 440 complaints about empty gift-cards between January 2011 and October 2011, up from just 33 complaints in 2010.

"Be wary about buying gift cards online [from nonretail sites] because you don't know what you're getting," says Greg Daugherty, executive editor of Consumer Reports.

Daugherty suggests purchasing gift cards from reputable retailers, asking clerks to scan pre-loaded cards to ensure they are still valid and retain their value and keeping the receipt in case the recipient has problems with the gift card.

4. Fake charities: From the holiday food drive at the supermarket to the bell ringing Santa outside the mall, opportunities for charitable giving are everywhere during the holidays.

Hoping to take advantage of your generous spirit, scammers develop fake charity schemes, soliciting donations to line their pockets.

"It happens anytime there is a tremendous amount of money changing hands, which is certainly the case at year end," explains Sandra Miniutti, vice president of marketing for Charity Navigator.

Miniutti notes that 40 percent of charitable contributions are made between Thanksgiving and Dec. 31, which means you're more apt to get a donation request at this time of year.

The prevalence of charity scams is not a reason to forgo annual holiday donations. Instead, check out charities through Charity Navigator or the Better Business Bureau Wise Giving Alliance before giving.

To ensure your donation is received by the charity, donate directly to the non-profit by writing a check or entering your credit card number on their website instead of giving over the phone or responding to a solicitation in the mall, advises Miniutti.

5. Skimming scams: Your credit and debit card information could end up in the wrong hands thanks to scammers who skim the info from the magnetic strip and use your cards to buy the items on their holiday wish lists.

"You're using your card more often at this time of year so it's important to be vigilant about checking your bank and credit card statements and reporting unauthorized charges immediately," advises Vincent.

To protect against skimming, Vincent suggests keeping your card in your sight at all times and covering the keypad when you enter your PIN at the checkout or an ATM.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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