Discount gift cards: How to avoid getting scammed

The holiday season doesn't just bring joy and presents--it also brings scams-a-plenty. With visions of identity theft dancing in our heads, many of us take precautions to protect our personal info, but that isn't the only way Grinch-like thieves can make off with everything but the Roast Beast.

Gift cards are extremely popular (nearly 60 percent of those surveyed by the National Retail Federation said they were hoping to find some plastic in their stockings), as are sites that discount, resell and auction them. But buying at a reduced rate may not always mean you're getting a great deal. Read on to know when to "Buy! Buy! Buy!" and when the deal is too good to be true.

A Buyer's Market

The Better Business Bureau recommends an all-out embargo on discounted online retailers, but other experts suggest these sites can be used safely. CNN Money explains gift card brokers (which swap, buy or sell gift cards) function by ensuring the value of gift cards and speeding up the sale. In exchange, they receive a percentage of the card's value. Auction sites, on the other hand, list gift cards in much the same way a seller would list any other product. Many card brokers offer a full refund for fraudulent cards, while eBay forbids auctioning more than one card at a time (making scamming less lucrative), Fox Business says.

For those who choose to shop auction sites, familiarize yourself with the site's return or fraud policy. For eBay, review the seller's feedback before bidding. If there is a problem, eBay Buyer Protection should cover most purchases, but it may take weeks or months to resolve a claim (leaving you empty-handed at the office Secret Santa exchange), so a reliable seller is essential.

My Money Blog found that sites for purchasing discounted gift cards tended to be slightly more expensive than eBay, but offered more security. Sites reviewed favorably by the most reviewers include Plastic Jungle, GiftCards.com, Gift Card Rescue, Cardpool and ABC Gift Cards. The majority of reviewers at Money Saving Mom had used Plastic Jungle, none report any issues, and most recommend the site. One reviewer points out, ABC Gift Cards requires a $50 purchase for free shipping, while Plastic Jungle always provides shipping for free.

When shopping around for the best price, Gift Card Granny allows shoppers to compare prices from a selection of sellers, but only if you already know which retailer you're shopping for. To get the best value from discount sellers, your best bet may be buying gift cards for specialty stores. The New York Times points out that stores with the broadest appeal, like Walmart and Target, resell for the highest value.

And For the Web Wary...

Even with sites' many assurances, buying discount cards online may still make some shoppers nervous. For these folks, CreditCards.com and MSN Money suggest several other options:

• Warehouse stores: The discounts on gift cards may not merit the membership fees at most discount stores, like Sam's Club, Costco and BJ's, but for those who already hold memberships, club stores offer savings of 10 to 20 percent on gift cards for many major chains.
• Buy in bulk: Depending on the store, purchases of multiple gift cards (think: into the thousands) may receive a discount. Contact the store's corporate sales department. Because closed-loop gift cards -- those distributed by a single retailer (or family of companies) and can only be redeemed at that store, or, often, at other stores owned by the parent company -- can't expire, these can be used well into the future.
• Credit card rewards: Consider redeeming credit card points for gift cards, or buy gift cards at stores where you receive extra reward points (like the grocery store). It'll amount to a discount of only 1 to 5 percent, but those savings can add up.
• Coinstar: Swap coins for cash and you'll be deducted a service fee, but opt for a gift card and you'll get those pennies' full value. It comes out to a savings of nearly 10 percent.
• Holiday bonuses: Local stores and restaurants may offer bonuses for purchasing multiple holiday gift cards, like buy one, get one 50 percent off. Gift both cards, and you receive a hefty discount.