Gift Cards

Gift cards are pure evil. I was reminded of this when I read this new bulletin on the reliable Snopes website about the latest scam where theives are jotting down the numbers from gift cards, calling to see if they have been activated, and then using the numbers to make online purchases.

But despite this latest example of gift card fraud (and there are many others, as well), gift cards were evil even before they were used to fraudulently steal money from the everyday consumer.

1. It is estimated that 15-20% of gift cards are never fully redeemed, and 5% are never used at all. Any one who has ever had a gift card will not be surprised by this, except maybe because they expected the figures to be even higher. This is the beauty of the gift card from the store's perspective - it is free money for the company any time it is not fully redeemed.

2. Nothing says "I couldn't bother to get you a real gift that I thought you might like" quite like a gift card.

3. Many gift cards gradually lose their value over time until they have no value. You can probably look up the obscure rules for how they are draining your card on some website somewhere, but what does it matter when you can't find the gift card anyway? Imagine the convenience of a $20 bill, but it is sitting in a bucket of acid and can only be used in one store. This is the equivalent of a gift card.

4. Stores are complaining that expiration dates are necessary for gift cards because they can't properly account for debts that may or may not be redeemed in the future. This is absurd. Just take the gift card money that you received up front, invest it in a special account until the card is redeemed, and do whatever you like with the investment returns which are FREE MONEY for your company.

5. When you get a gift card to a restaurant, you must select which way you want to lose money:
(a) Order extra drinks you don't want so you don't end up with money left on the card.
(b) End up with money left on the card, so now you have to go back to the restaurant again.
(c) End up with a small amount on the card, then watch it expire, toss it in the trash, or find it 4 years later when you're cleaning out the drawers in the kitchen.

I am encouraged by sites like Plastic Jungle that allow you to buy and sell gift cards. Maybe this will give us a chance to get back at these corporations who have been tricking us into giving them free money for too long.

Update 1/8/07: I guess some famous people are reading this blog. Click here to see a New York Times Magazine article by the guys who wrote Freakonomics, validating most of what we discuss above.