|
Consumer Reports urges people to avoid gift cards this holiday season, saying they’re a windfall for retailers, and warning customers of potential hidden fees. We spoke to our friends at Cardavenue.com¸ the leading online marketplace for buying, selling and trading unused or unwanted gift cards, about the report. Below is a Q&A with Bob Butler, the founder and CEO of the site.
What is your response to the Consumer Reports public education campaign?
They’ve hit the nail on the head in terms of the problem. Billions of dollars are being wasted on cards that go unused. But contrary to their report, retailers don’t always benefit from the unused cards. In some states, retailers are required to hand over revenue from unused cards to the state as unclaimed property. Cardavenue was founded to help alleviate the issue of unused cards, benefiting consumers and retailers alike.
What is Cardavenue?
Cardavenue is the premier online marketplace for secondhand gift cards. People with unwanted cards can auction them off or trade them for gift cards from a retailer of their preference. And bargain hunters can pick up cards at auction for deep discounts, providing substantial savings for purchasing gifts or items for themselves.
Who benefits most from gift cards – picky consumers or companies?
Both. Despite their supposed disadvantages, gift cards provide gift recipients with greater flexibility to choose a gift of their liking without being as impersonal as cash. Retailers, on the other hand, frequently benefit from the “lift” or upsell – the amount of money customers spend above and beyond the face value of the card.
How does Cardavenue work?
Consumers can post cards for auction or trade. The site offers features for managing and facilitating trades for cards from consumers’ favorite retailers.
What percentage of gift cards go unused?
According to the Consumer Reports survey, 25 percent of consumers who got a gift card last holiday season still haven't used them. In total, 10 to 15 perent of gift cards go unredeemed.
What happens to the money on gift cards that aren’t used?
In some states, laws dictate that the money from unredeemed gift cards be turned over to the state where the retailer resides as unclaimed property. However, the laws are inconsistent, so it really varies from state to state.
Why are companies allowed to impose dormancy fees or expiration dates?
Actually, in many states they are not. A lot of states have outlawed dormancy fees and expiration dates. In addition, most national retailers have stopped using them after backlash from consumer groups and because of the inconsistencies in state laws. There have been attempts to pass national legislation regulating gift cards, but so far none of these proposals have generated much attention or traction.
In your opinion, are consumers becoming more savvy about gift cards?
I think so. Cardavenue has experienced exponential growth since we launched in the 2004 holiday season. People are realizing they have other options besides sitting on unwanted cards or settling for purchasing items they don’t really want just because they have a card for a specific retailer.
Is there a fee associated with using the site?
Yes. We charge a 3.95 percent commission on the winning bid price for cards that are sold at auction, plus a 50-cent transaction fee. For trades, each trader is charged 3.95 percent of the reported value of the card and a 50-cent transaction fee. Buyers never pay any fees to Cardavenue.
How do consumers know they are getting what they’re buying? Should they be concerned about potential fraud?
Consumers should use caution in any online transaction. However, Cardavenue has more protections in place than any other secondhand marketplace for gift cards. We offer our CardAssure and CardCowboy programs to help protect buyers, sellers and traders. CardAssure is basically an insurance program on cards up to $150 in value, with a $10 deductible per transaction. CardCowboy attempts to independently verify the reported value on all gift cards above $100 whenever the respective retailer has toll-free numbers or pins in place allowing us to do so. Cardavenue also is the only company I know of that insures gift cards that are lost in the mail.
In addition, every Cardavenue member must have an active PayPal account which helps track down users if fraud occurs. We’re also certified as a VeriSign Secured site. To date we’ve only had isolated incidents of nefarious activity on the site. We monitor posted cards, and cheaters are typically pretty easy to spot. If something smells fishy, it usually is.
Do you have any closing thoughts?
I think the Consumer Reports survey is right on the money in terms of the unused gift card problem. However, they’ve failed to recognize the options available, including Cardavenue and other secondhand markets for gift cards. The web is empowering consumers like never before, giving them more control, flexibility and options. As the popularity of gift cards continues to increase, you’ll hear more and more about this burgeoning secondhand market.
 |
