news.yahoo.com— Retailers profit from unused gift cards. Last winter, Best Buy Co. reported a $43 million gain in fiscal 2006 from cards that hadn't been used in two or more years.
Dec 18, 2006View in Crawl 4
jAppl: It does have a barcode that you can scan in case the magnetic strip dies. It also has a number that can be punched in if the barcode dies. BestBuy gift cards also never expire, and don't have any finance charges. I don't know where everyone is getting what they are saying, unless the old gift cards did expire or something like that. I don't see what the big deal about it is. Profit from unused cards probably means future profit for cards that will be used.
@Future2"My RDO told me that 50% of all gift cards sold are never redeemed. He said selling gift cards was like printing your own money. This is why every store in every line of business has a ton of POP trying to trick you into buying a gift card for that someone special."And 72% of all statistics are made up on the spot. -Your RDO is absolutely wrong. The vast majority of GCs (upwards of 90%) are redeemed within the first 30 days. The reason companies offer GCs is because of the consumer demand. They are very lucrative to the merchant but mostly because the average person will uplift the sale by a healthy percentage when using a GC than with cash or credit.By uplift, I mean most people who go in with a $20 GC will buy $30 worth of stuff. The additional $10 is called 'uplift'.The other revenue generator is the float that the merchant gets to keep from interest made on the money stored in the value of the cards. TFA mentions "unused" GCs which by most state laws, means the merchant can only claim the money as abandoned property after a certain period of time of inactivity. The unused money can sit in the merchant's bank account gathering interest until used or abandoned. Most state abandonment laws take effect after 2 years which is why you see most GC expiration dates right at around the 2 year mark.While most companies have done away with GC expiration dates (by law), this doesn't change the abandoned property statute at all. This means that instead of the merchant getting your unused money, the state government has a shot at it first.Service fees (amounts deducted after a period of inactivity) are usually imposed by merchants who desire to decrement the balance of unused GCs prior to it going into the abandonment stage since claiming abandoned property is a huge pain in the ass. Basically, the government gets it first then you have to get it back from them (minus a healthy amount of course.)The bottom line for everyone to know is that you only have yourself to blame if you don't use the entire balance on a card. It's not a secret conspiracy by companies to screw you. It's the same thing as you dropping a quarter on the floor and not bothering to pick it up.(Digg me down for telling the hard truth if you want to. I know this stuff because I worked for one of the largest GC providers in the US).
@RockMyMonkey (the very first comment)There are so many replies to this that I doubt you'll ever see this... I hate to burst your rant, but you can cash out a gift card at Best Buy. So, I guess it's not a scam anymore. You can go to any customer service rep and cash it.
Dig me down if you want (You people seem to not like to hear about politics,economics, consumer protection) , but every once in awhile the legislature in Rhode Island actually does something right through happy accident. This one such case. Gift cards cannot expire if sold here, period.
cybrshrkDec 18, 2006
What a boring idea just giving out gift cards...are you always this creative??
jappiDec 18, 2006
It costs far less than 50cents to make a giftcard.
moderngeekDec 18, 2006
jAppl: It does have a barcode that you can scan in case the magnetic strip dies. It also has a number that can be punched in if the barcode dies. BestBuy gift cards also never expire, and don't have any finance charges. I don't know where everyone is getting what they are saying, unless the old gift cards did expire or something like that. I don't see what the big deal about it is. Profit from unused cards probably means future profit for cards that will be used.
mrswirlDec 18, 2006
@Future2"My RDO told me that 50% of all gift cards sold are never redeemed. He said selling gift cards was like printing your own money. This is why every store in every line of business has a ton of POP trying to trick you into buying a gift card for that someone special."And 72% of all statistics are made up on the spot. -Your RDO is absolutely wrong. The vast majority of GCs (upwards of 90%) are redeemed within the first 30 days. The reason companies offer GCs is because of the consumer demand. They are very lucrative to the merchant but mostly because the average person will uplift the sale by a healthy percentage when using a GC than with cash or credit.By uplift, I mean most people who go in with a $20 GC will buy $30 worth of stuff. The additional $10 is called 'uplift'.The other revenue generator is the float that the merchant gets to keep from interest made on the money stored in the value of the cards. TFA mentions "unused" GCs which by most state laws, means the merchant can only claim the money as abandoned property after a certain period of time of inactivity. The unused money can sit in the merchant's bank account gathering interest until used or abandoned. Most state abandonment laws take effect after 2 years which is why you see most GC expiration dates right at around the 2 year mark.While most companies have done away with GC expiration dates (by law), this doesn't change the abandoned property statute at all. This means that instead of the merchant getting your unused money, the state government has a shot at it first.Service fees (amounts deducted after a period of inactivity) are usually imposed by merchants who desire to decrement the balance of unused GCs prior to it going into the abandonment stage since claiming abandoned property is a huge pain in the ass. Basically, the government gets it first then you have to get it back from them (minus a healthy amount of course.)The bottom line for everyone to know is that you only have yourself to blame if you don't use the entire balance on a card. It's not a secret conspiracy by companies to screw you. It's the same thing as you dropping a quarter on the floor and not bothering to pick it up.(Digg me down for telling the hard truth if you want to. I know this stuff because I worked for one of the largest GC providers in the US).
flipzmodeDec 19, 2006
@RockMyMonkey (the very first comment)There are so many replies to this that I doubt you'll ever see this... I hate to burst your rant, but you can cash out a gift card at Best Buy. So, I guess it's not a scam anymore. You can go to any customer service rep and cash it.
bcrockettDec 19, 2006
"M" apparently depends on which school of thought you come from. It's a discussion for another thread, but in the financial and printing industries (where I come from), as well as many others, M means thousands and MM means millions. For a lengthy but informative discussion on the topic, visit: <a class="user" href="http://mathforum.org/library/drmath/view/60697.html">http://mathforum.org/library/drmath/view/60697.html</a>In any case, Best Buy's gotta love those gift cards.
laserdiscDec 19, 2006
Cash is the best gift! It let's me buy what I want, when I want and where I want.
kd1sDec 22, 2006
Dig me down if you want (You people seem to not like to hear about politics,economics, consumer protection) , but every once in awhile the legislature in Rhode Island actually does something right through happy accident. This one such case. Gift cards cannot expire if sold here, period.
rybupspAug 24, 2007
I wrote a piece that compares profits from credit cards to dividends paid to shareholders. I think its pretty interesting. Check it out.<a class="user" href="http://councilofnicea.blogspot.com/2007/08/billions-in-unredeemed-gift-cards.html">http://councilofnicea.blogspot.com/2007/08/billions-in-unredeemed-gift-cards.html</a>
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chuk1Jul 2, 2008
Gift card are not a scam <a class="user" href="http://retail-report-card.blogspot.com/">http://retail-report-card.blogspot.com/</a>
arthereFeb 2, 2009
I really hate how these companies are making money off of unused gift cards.<a class="user" href="http://www.creditcardassociate.com/best-buy.html">http://www.creditcardassociate.com/best-buy.html</a> and <a class="user" href="http://www.creditcardassociate.com/american-express-gift.html">http://www.creditcardassociate.com/american-expres ...</a>
eng12Feb 10, 2009
Gift cards are worth more than fiat currency.
forvalentineFeb 1, 2010
Wow! Great profit.