Forum Moderators: buckworks
I bought a couple of items online on Amazon on one card and had a small balance left.
I knew exactly what my remaining balance was because I looked it up online at the charge-gift card's web site and then made an order for the exact amount to use up the card. Amazon sent me an email the next day and said my gift card was declined by the charge-gift card company. The charge-gift card company's web site then showed a debit to my account for the exact amount Amazon said they declined and then they added a $2.00 monthly service charge on top of that!
Then curiously their web site showed my card had a $-2.99 balance.
So the problems were:
1) The charge card company went ahead and debited my account for an amount they told Amazon they declined. Later their customer service rep tried to convince me that my card number must have been stolen and used by someone else, coincidentally at the exact same time to the minute (around midnight) and for the exact same amount I tried to make a purchase at Amazon. I think that is highly improbable and that a more likely cause is that their processing program has bugs.
2) They added a service charge to a card that their own system was showing had been used up and had a zero balance.
3) The monthly service charge was $-2.00 but they showed a $-2.99 balance, so their program was not even doing the service charge math correctly, on top of the other errors listed above.
4) Earlier in the day I tried using the gift card at a local brick and mortar store and the purchase was declined, even though I checked the balance before I left the house on the web and new exactly how much was on the card.
The charge-gift card company gave me a $5.00 credit right away when I complained. Clearly their gift card proccesing program has many errors not in the customer's favor and they rectify it for people who catch the problem and complain, but what about everyone else who doesn't track their card balances so closely? Multiply this times millions of gift card holders and I see this as a potentially huge consumer issue. (This is a company that is regularly on the hot seat in the news for shady practices in some of their other subsidiaries.)
Anyone else have any problems with gift cards from charge card companies, either as a consumer or a merchant?
Amazon emailed the next day? I would have thought they would Auth. the card on the spot as part of the order process. That part strikes me as weird...since you were allowed to complete the order, and it looks for all the world like the charge DID go through to the gift card.
They show transactions that have been delined as "pending" in their customers' online accounts AND reduces their available credit for the amount.
I found a consumer site that complained of exactly the same thing, all of the problems I had, and many, many more.
I never realized what a scam these generic gift cards are in general. Many people seem to have bought them and then the charge card company says they were not activated and they require a lot of paperwork to get working so most people just give up.
Funny how most of these issues exist don't seem to be a problem with real charge cards. I would suggest anyone think twice before buying them as gifts, or at least read some of the comments on the consumer issues sites before you do.
Based on my experience and from reading online consumer sites, many places do not accept the gift cards, of the places that do accept them there are restrictions on the kind of merchandise you can buy, of the places that say they accept them they often get rejected even when there is a credit balance on the card and many more issues.
Anyone else have any problems with gift cards from charge card companies, either as a consumer or a merchant?
From a consumer standpoint, I don't want them. I'll take cold hard cash, an Internationally accepted form of currency. :)
Hmmm, how many gift cards have I lost? Or thrown away by accident? How many have I given to family and friends because I typically won't use them? How many have expired? The list goes on and on.
From a merchant standpoint, Gift Cards are second to Sliced Bread. Its money in the bank. And, there is a good chance that some of that money will never be claimed. I have to wonder what percentage of Gift Card purchases are redeemed. And, what the time spans are for those percentages to start dropping to a point where the expiration date has now approached.
In another life, I've managed various Employee Incentive Programs. One of the programs involved the "giving" of gift catalogs to employees. Catalogs are at different dollar values based on the level of incentive. We found that the larger dollar amount gift catalogs were the most likely to be redeemed shortly after being received. The smaller dollar amount catalogs were a completely different story e.g. ones for $25.00, $40.00, $50.00. In some instances the redemption rates were less than 75%. Yes, some of that is influenced by the selection of products in the catalogs. It all comes down to perceived value.
Who won in the above scenario? The Gift Catalog company of course. And then my corporate entity due to the sale. Who lost? Unfortunately the client did. They paid for 100 catalogs and only 75 were redeemed. The other 25 were never to be seen again. Where did they go? Why weren't they redeemed? Does the same process apply to Gift Cards? I'll bet it does. The percentages may not be as high but I'm almost certain the revenues generated from unredeemed Gift Cards is off the charts.
Personally, for the most part, Gift Cards are "always" a win for the Merchant. The Consumer is a different story.
Re-Gifting: Unused Gift Cards Can Boost Company Income
[cfo.com...]
Two years ago, Best Buy, an electronics retailer, did precisely that. It first moved $39 million attributed to unredeemed gift cards from liability to income. It then determined that, on average, gift cards that haven't been used after two years never will be.
$39 million in unreemed Gift Cards? Man, talk about a money making opportunity!
They show transactions that have been delined as "pending" in their customers' online accounts AND reduces their available credit for the amount. So if a customer tries their card at our shop, say mistypes the CVV code or something to get declined, then tries it again and it goes through, it looks for all the world like they are getting charged twice in their online banking, as both the running balance and available credit reflect both the good and bad transaction.
I believe that this is standard.
It happens to us all the time with online transactions where the issuing bank approves the authorization but then the AVS check fails.
We get calls All. The. Time. from customers complaining about it.
Hmmm, how many gift cards have I lost? Or thrown away by accident? How many have I given to family and friends because I typically won't use them? How many have expired?
I usually let that happen but I had such a stack accumulated that I decided to use a bunch of them up online all one afternoon before they lost all value to service fees. I am now the proud owner of a fondue set, Dance Dance Revolution for the Wii and various exercise tapes I'll probably never use. But at least those items will be sitting in my closet instead of having the money revert back to some credit cards company's balance sheet. :) I tried to donate the balances on the cards online to various charities but gave up after none of the charities could process the card numbers.
Specifically, if someone is trying to empty their card and they enter any information wrong, such as the CVV code or the expiration date, a hold is put on the funds which quite typically lasts for two weeks or even 30 days. This happens with credit cards too, but because credit cards usually have room to spare, no one notices if a hold on funds is there for a while. With gift cards (technically "debit" cards) there is no extra room when you are trying to empty your card completely.
[edited by: tedster at 2:42 am (utc) on Aug. 20, 2008]
