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by An estimated $55 billion in gift cards were sold in 2004, and about 10% of their value goes unused, as consumers either lose, forget or discard them. This can result in large profits for retailers. Home Depot, for example, tallied their gift card "breakage" (or unused value) from 1998, when it began its gift card program, to 2001, and reported a $43 million income. Limited Brands recorded $30 million in 2005 revenue because of unredeemed cards.
The trend looks to continue, also. Laura Lane, vice president of unclaimed property services for Keane Co., estimated about 6% (or $4.8 billion) of this year's gift cards will go unused. Consumer Reports puts the number at 19%.
This obvious gain for retailers is also the consumer's loss. Money Magazine has listed unused gift cards as one of seven ways to unlock your hidden assets. By selling the cards on eBay or trading them on card-swap sites, such as cardavenue.com, consumers can redeem money that would otherwise be lost.
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Gift cards that are left on racks or out in the open at stores are prone to a security problem. Don't get any ideas or anything, but it seems that many gift cards have their serial number visible on the back before purchase. People are copying this down and checking periodically on the stores website to see if it gets activated. If it is they go on a spree from that website. Another fancier fraud is where they steal the cards, copy them and then put the copies back and wait for them to be activated. The only one to get caught with the fraudulent card is the innocent customer.
Most of the bigger more interesting stores use magnetic cards that are much harder to hack, and probably not worth the effort of duplicating.
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Gift Card Searches Surge As Last Minute Gift Idea by tomtolman :: NR6 :: on 19 December 2006
This post is well timed as last-minute holiday shoppers search for gift cards. Hitwise, a company that closely tracks Internet trends, issued a press release today that indicated that people are searching for gift cards in greater numbers as we get close to Christmas. From the press release:
Gift cards are a great business for companies even if people use them. It forces people to purchase from the selected store. In addition, most people probably buy more than the card is worth (i.e. buy a $20 DVD with a $10 gift card). Some people, and I don't quite understand this one, even make money selling gift cards for more than they are worth on eBay.