Sunday, December 17, 2006

Trading Gift Cards: My Chat with Golbguru

This is how my latest column begins in the Miami Herald:
Like the stock market, trading has also become brisk for gift cards that recipients don't want.

With gift-card sales expected to reach $24.8 billion this year, chances are high you'll be a recipient. If you get a gift card from a store or sector that holds little interest for you, there's a market for unexpired gift cards.

You can trade or sell that unwanted gift card at a number of websites, according to Golbguru, author of the popular website, Money, Matter and Musings (www.TheTaoOf MakingMoney.com).



I was inspired to write that column after hosting the Festival of Frugality and spotting Golbguru's column about giftcards. I had read other pieces and information about the secondary market for gift cards and it was a topic I wanted to tackle.

So via email, I interviewed Golbguru. Here's the reply he sent me:

Q. What should a consumer worry about with these card trading services?

Golbguru: If you directly sell your cards to the websites, there is not much risk involved. The websites are up and running to do business and they take effort to see that they don't earn a bad name early on and usually they will address all problems quickly. However, make sure that the website has a phone number in place where you can call and ask questions if things go wrong. I would not do business with a website that does not have a customer service email and a phone number displayed.

PayPal Protection

-Even if you sell your cards in auctions or to a third party through these websites, you do not have too much to worry about since all buyers will have to pay (usually through PayPal) before the transaction is considered complete. So there is no such thing as "I didn't get paid for the card I sold." Also since most third-party transactions will be through Paypal, some seller protection is available. You can read more about this on Paypal's website.

-Before you sell your cards, make sure they are not "non-transferable" and also that they are not expiring soon. Usually, websites will have clear guidelines on these issues, so check these guidelines first to avoid getting into trouble.

Buyer Protection

-If you are a buyer, then you need to be more careful when you deal online. If you are buying your card from an auction on one of these websites, make sure that you buy it from sellers who have a positive feedback. Potential problems here are with buying gift certificates that are no longer valid or buying gift certificates that do not have the full promised value (for example, you buy a $50 gift certificate but later realize that it has only $30 balance on it).

For such instances, most websites will offer some kind of a buyer protection. The buyer protection amount varies from website to website, so you need to check that before you start buying. Again, most of these transactions will go through Paypal and there are some buyer protections in place.

Fees

-Most websites have some fees associated with buying/selling/trading transactions. These fees are either percentage basis (based on the value of your card) or a fixed value basis (say $3.99 per transaction irrespective of the value of the card). Usually, for selling low value cards websites offering percentage basis fees are preferable, whereas for selling high value cards, fixed fee websites are preferable.

-Some gift cards have transaction fees, closure fees and "no-activity" fees associated with them. Make sure you are aware of these fees before buy/sell you card through these websites. The trading/buying/selling websites are not responsible for these fees and they won't be able to help you later if you loose the value of your cards through such fees.

The most important thing:
-Always read the fine print.
-Golbguru of Money, Matter and Musings

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1 comment:

Golbguru said...

Wow ! :) Thanks so much for doing this. I hope your readers will like it.