Aside from personal family, friends, and acquaintances, many consumers have a relatively short list of “trusted sources” they would readily respond to in the event of an alarming message or email. Utility companies and phone carriers are two examples. Governmental agencies are another; after all, you wouldn’t refuse a call from the IRS!

But here’s the thing: you should absolutely never respond to “urgent,” unsolicited emails of any kind. That’s true even when they appear to come from someone you know. Scammers often pretend to be someone you know who needs help. Or, they might impersonate an official-sounding agency and instruct you to take some action.

Never take these messages at face value. If you get one of these emails or SMS messages, immediately flag that message, then contact the party in question through another channel to see if it’s legitimate.

The key to scams is to elicit a knee-jerk response. They want consumers to act before they think too much about what the scammer is claiming.

Popular scams often rely on a quick response to some time-sensitive problem that could have dire consequences for you or your family. They might say you’ve won a massive prize, for example. To claim it, though, you have to follow a series of links or fill in your account details for a prepaid card.

Other scammers may urge that you have a virus, have failed to pay a bill, owe money, or someone in your family has an emergency. They can threaten to sue you, threaten you’ll be arrested, or even be audited by the IRS if you don’t do what they say quickly.

In any case, whatever comes through your email and SMS, immediately flag anything that makes unlikely claims like this. Bill collectors, for instance, will not reach out to you through a third party, and will NEVER ask to be paid with a prepaid card.

Many scammers will insist that you pay them via a prepaid card because, like we mentioned above, they’re hard to track and equivalent to cash. If not prepaid cards, they may try the same thing with cryptocurrencies, or wire transfers.

All are relatively untraceable means of filching your money. The scammer will wait for you to load money onto the card, then vanish.

Another common tactic here is to send you a check to deposit into your bank account, which will turn out to be fake, and have you send them the difference.

This is a more modern version of a classic wire transfer scheme. Here, though, the scammer uses email to commit the crime, instead of the post office. Using a fake email address, criminals will extort money from their victim. The scammer attempts to convince a victim to pay an upfront fee in order to receive a prepaid card fully loaded with cash, for instance.

A criminal calls or emails a merchant to claim they are a representative for their payment processor or issuing bank. Using stolen prepaid card data, the scammer declares that there is a problem loading the card, and the unwitting merchant or staff member will reload the card electronically. This allows the scammer to offload the funds into a dummy account or withdraw them directly from an ATM. Sometimes, the merchant may reload the card several times before detecting the fraud.

For this scam, a fraudster will preload a gift card or prepaid card with data stolen involving a magnetic stripe reader. When an unsuspecting consumer buys and activates that gift card, the fraudster will steal the card number and use those funds to make purchases or siphon funds from the card.

Card swapping involves a scammer stealing a stack of physical cards and copying or altering the numbers. The scammer will then return the cards to the store and re-hang them on the rack. When a consumer purchases and loads one of the cards with cash, the fraudster can drain the account before the customer even leaves the store.

Most tax return services offer prepaid cards as a means of providing tax returns to non-checking account holders each year. Using a stolen identity, a scammer can fill out tax forms and select a prepaid card to receive the tax refund for that consumer. In effect, the fraudster submits another individual’s tax return, then steals their funds.

Scams in this category can range from simple to complex. On one end, scammers simply repackage spent prepaid cards for fraudulent resale. Other times, fraudsters may manufacture bogus cards by applying fake magnetic stripes or numbers to plastic blanks. Consumers who fall victim to this scam then find that the prepaid cards they purchased actually have a $0 balance.

Sometimes, merchants are defrauded by their own staff. Dishonest employees who have the authority to activate prepaid cards may abuse this privilege for their own benefit. To cover up the fraud, staffers may transfer prepaid card balances to different cards, create fake invoices to cover up unauthorized purchases, or work with third parties to return goods purchased with stolen funds. Employees can also defraud buyers directly by overcharging customers for purchases or stealing card information from legitimate cardholders.

In this scam, fraudsters set up fake “top-up” stations for refilling card balances, or create fake websites that mimic those of real prepaid card companies. Scammers then lure cardholders in by promising top-up bonuses, rebates, or other discounts, none of which will ever materialize. Unfortunately, cardholders who fall victim to this scam often have both their funds and their identities stolen.

Here, scammers disguise themselves as a trusted vendor. For individuals, that might be a utility company, telephone company, or HOA. For merchants, fraudsters could pretend to be a wholesaler, site hosting provider, or accountant. The fraudster will aggressively demand payment using fake email addresses, phone numbers, invoices, and letters, usually claiming that the cardholder or merchant’s prepaid card balance was insufficient and could not be processed.

In this classic scam, fraudsters use spoofed phone numbers, voice changers, and other tools to call cardholders. Scammers then ask for payments through a prepaid card or gift card. Other times, fraudsters convince victims to part with their gift card details, which they then use to make unauthorized purchases.

Prepaid card scams either result in upfront losses or can serve as precursors to return fraud or chargebacks. Both types of post-transaction fraud have sharply negative consequences for merchants.

Chargebacks are also a downstream consequence of prepaid card fraud. Legitimate prepaid cardholders who fall victim to scams may file chargebacks to recoup their losses. And, every time a chargeback is filed, merchants lose out on revenue, merchandise, and incur chargeback fees that range between $20 to $100 per dispute. Merchants may also have to hire staff to investigate fraud claims, pay for fraud prevention tools, or spend more on advertising to counteract their damaged reputations.

Cardholders who experience repeated fraud with a merchant are unlikely to remain loyal to that seller. Disgruntled cardholders may resort to drastic measures like negatively reviewing the business online or spreading ill will through word of mouth. As a result, both current and potential clients, even those who were never victims of fraud, may shun the business.

Let’s go back to the matter of chargebacks for a second. Merchants targeted by prepaid card scammers may experience more chargebacks, resulting in higher chargeback ratios. This, in turn, hurts the merchant’s working relationships with their processor and acquirer.

Fraud comes with opportunity costs. Merchants have to spend significant time and resources investigating fraud cases, fighting prepaid card chargebacks, or providing customer support to cardholders who have been scammed. That means they have less time to devote to revenue-generating activities.

In other words: product development initiatives, PR efforts, and operational improvements are often put on the back burner whenever merchants have to refocus on contending with scammers.

Merchants who sell gift cards must be in compliance with PCI-DSS requirements. If a merchant observes significant fraudulent activity among the cards they issue, that could be a sign that they are not in compliance with these standards.

Unfortunately, card networks often impose swift and hard corrective measures on merchants who fail to comply. Fines can range from $1,000 to $100,000 per month; large merchants may incur additional penalties from the Federal Trade Commission.