Gift Card Reselling / by kevin murray

In America, gift cards are the most popular gift for Christmas and other special events throughout the year, probably because of their ubiquity, their flexibility, their availability, their ease-of-use, their ease of delivery, and the fact that with the exception of the gift card store that has been selected, the recipient of said card can use it to pick out whatever merchandise that they desire.  In recent times, though, another choice has been presented to the recipient which is the ability to sell the gift card for cash.   With the amount of gift cards sold in the USA at over 100 billion dollars each year, this has created a marketplace of resellers in which is the leading marketplace consolidator for people that either want to buy or sell their gift cards.  While you can also buy and sell gift cards through sites such as craigslist or eBay, your risk for doing so is increased considerably anytime you are dealing individual-to-individual as opposed to dealing with a company that makes it their business to buy and sell gift cards and has put into place conditions and protections for its consumers and sellers.


Buyers of gift cards will receive discounts that range from as small as 2% to upwards of 30% based on the popularity of a particular gift card.  For instance, a Wal-Mart gift card sells for a small discount, whereas Frederick's of Hollywood sells for a large discount.  The converse is true when it comes to selling a gift card, in which the seller of a Wal-Mart gift card may get about 93% of its value, whereas the seller of Frederick's of Hollywood would be fortunate to get 70% of the value of the card.  When you sell your gift card to a consolidator you will typically receive your payment through either PayPal, Amazon gift card, check, or direct deposit, with the receipt of that payment being accomplished shortly after verification of the balance of the gift card.  Buyers of gift cards typically will pay via credit card, debit card, or through PayPal and unless the card is an electronic card (i.e. non-physical), you will receive your bought gift card within a few days through the mail.


There is, however, a fundamental flaw of this gift card exchange program and that is the seller "holds over" the buyer.  That is to say, the seller has all the information on the card in regards to the gift card number and the gift card pin, andcan "double-dip" by selling the card, and then after receiving their money, using the card themselves online.  Of course, this isn't legal, but it's done, and that is why the spread between the buy price and sell price is often around 8-10%, whereas if there wasn't any double-dealing going on, that spread would be considerably tighter.


Another question to ask is where do all these various gift cards come from?  The quick answer is that the cards come from consumers like me and you, that simply want to exchange a gift card that doesn't suit them for cash to pay bills or to buy something else that is more desirable, or even another gift card.  That's the short answer but I believe there is another answer.  Employee theft within retail stores is a serious problem and previously if an employee stole product from your store he would have to sell it at a significant discount on the street, or online, or at a swap meet, in which all of these things bring their own risk and also a delay in receiving monetary compensation.  Today's ability to buy and sell gift cards online has changed this dynamic considerably.  Now, an employee can steal from the company that employs him, typically then find someone else to exchange the merchandise for him at a different store or even the same store, and that person will receive store credit in return for that merchandise with no need of a receipt.  After receiving that store credit in the form of a gift card ormerchandise credit it can then be sold online for a very high value (e.g. 85-90%) as compared to its full worth and the criminal will receive cash for his troubles, all in a very short period of time and with no real questions asked.


Retailers aren't stupid and they probably are aware of this new phenomenon, in which they don't want to alienate their legitimate customer base but they do want to stop and/or better track shrinkage within their companies, but they will have to make some adjustments in order to do so, because the upside for employee thefts has never been better.