Huge Negative eBay Gift Card Changes: What you Need to Know!

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ebay gift card changes

eBay Gift Card Changes – Huge Negative

I write about quite a few merchant gift card deals here on Miles to Memories because they are often a good way to manufacture spend. Unfortunately, one way that people do that is now changing. eBay gift cards are no longer able to be used to purchase third party gift cards. This is a huge change and one that came without any notice.

This signifiant change is now in effect and is documented in the latest version of the eBay terms. Here is what the new terms say:

The Gift Card also may not be used to buy eBay Gift Cards, third party gift cards, gift certificates, coupons, coins, paper money, virtual currency, or items generally considered to be “bullion” (for example, gold, silver, and other precious metals in the form of coins, bars, or ingots).

Can I get a collective BOOOOOOOOOOOOOOOOOOO? Of course this comes after they implemented a $2,000 per 60 day limit on eBay gift cards back in July. In other words, eBay is tightening and it hurts.

What Does This Mean?

Essentially you can no longer buy any gift cards with eBay gift cards. Gas gift cards? Nope! Travel gift cards? Nope! Any other gift cards? Absolutely not! I am not surprised by this given that very few merchants allow for the purchase of gift cards with their own gift cards. That doesn’t keep this from hurting though, especially given the lack of notice.

If you are holding a lot of $$$ in eBay gift cards and are wondering what this does to the value of them, I want to paraphrase an email I received from a company that I sell gift cards to. They significantly lowered the value at which they will purchase eBay gift cards and said that the changes have a significant impact on how eBay gift cards can be used and thus the value has been diminished a lot. (A LOT!)

Conclusion

I still purchase enough merchandise on eBay that I can easily liquidate my eBay gift cards, but this is a huge blow and one that will make some eBay gift card deals not as attractive. I know many of you relied on discounted eBay gift cards to make some of those deals profitable and things will be quite different now. I’m not sure why companies don’t feel the need to both give notice and to properly disclose changes, but my only guess is they feel they can get away with it.

What are your thoughts? Should eBay have disclosed this ahead of time before selling thousands of dollars worth of gift cards to customers? Is this just par for the course? Let us know your thoughts in the comments.

HT: Doctor of Credit


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26 COMMENTS

  1. I refuse to buy or use gift cards. They are a scam. I got one ($100) for Xmas several years ago. It was for a local mall and was valid in any store in the mall. I tried to use it many times but most merchants said they would not accept it. When I eventually was able to use it, they had taken $17.50 in service charges from the total because I had not used it.

  2. What a joke. Apparently, eBay has forgotten the olden rule of the gift card industry – gift cards drive traffic. (And let’s face it – eBay gift cards aren’t discounted THAT much.) Even if you put aside the MS factors, every outfit that sells gift cards on eBay has essentially been told they are second rate customers and eBay doesn’t value their business. Not to mention the retail customer – thought about giving someone an eBay gift card so they can decide what gift card THEY want? Forget it. Why do companies continually shoot themselves in the foot with this type of nonsense? Now that I got that off my chest…..

  3. As a consumer arbitrageur, I don’t like it but I recognize that eBay is not is business to make me money. Companies offer promotions and loss leaders if they provide a net benefit to them, not me.

    I am not sure about the legality or morality of eBay’s decision but it remains to be seen whether it is a good business decision. As, Jeff R says, gift cards drive traffic and a significant portion of gift cards are never used which represents pure profit to the issuer. (Someone told me that Target has occasionally accepted Wal-mart gift cards because it drives traffic.) So, ultimately the question is whether eBay’s moves increase of decrease its profits. Only time and the market will tell.

    • exactly. we will see how this goes, but I dont know how large the GC business is for eBay. maybe its so small that ebay doesnt give a crap. so I am not surprised they made this restrictive move. people who immediately think eBay will go bankrupt from this and lose massive sales, need to rethink this situation from eBays perspective. its a huge hit to our community. but to eBay? not sure.

  4. Nearly all of the retailers who used to allow this practice have stopped allowing it. It should not surprise anyone that Ebay has finally caught up! The margins are low and fraud is rampant, not a great business model.
    If we are clever, a work around should develop, just as it has for another large etailer.
    For buyers, this is good news, Ebay G/C should be available at a bigger discount.

        • The large retailer that you use a work around. While you’re at it I wouldn’t mind knowing what the work around is.

          • He would post it on here because he specifically asked what I wanted to know. He could have easily said “sorry, I don’t feel comfortable sharing that on a public forum” but he instead asked me a follow up question.

            Also, aren’t you always bashing people for going against the rules (ie doing MS on the Platinum offer)? So why would you care if a work around gets revealed?

          • Look for it, the workaround for the store with the smile boxes is available if you search. I haven’t used it lately because they don’t have a great gift card selection, but it was working a few months back.
            We may never find a workaround for Ebay, but who knows. Ninjax has a point with regard to the publication. Never know who is reading and how many times we can take advantage before the loophole shuts.

          • I actually have no clue what store you are referring to. I searched Bing for “store with the smile boxes” and all I found was The Container Store and Smile Box (whatever that is) and I can’t imagine you mean one of those. Anyway, thanks for replying back as most people would have simply ignored my initial message.

            Also, I was more annoyed with NinjaX’s rude response than his actual point.

  5. Not surprising really. I guess I am lucky that I recently used up all my ebay GCs except for a $50 card that came in yesterdays mail.

    They had made them more difficult to use for sure. (Keeping up with the numbers and having to manually enter them every transaction).

    I wonder if ebay bucks are going to have the same restrictions ?

    Amazon sales tax is coming to my state Nov 1. All good things come to an end I guess.

    • That is a good possibility, since the fees are much lower for them. Ebay offers sellers a cut in fees for offering daily deals, just as they do for large gift card sellers. Since they spun PayPal back off, both companies have made adjustments to their offerings to improve profitability. They have the data to determine which products are marginal and which are more profitable.
      We can expect more tweaking, just as with the CC companies and the banks. It is getting easier for companies to tweak their business without as much executive guessing.

  6. I wonder if eBay gift cards will ever fall below 87% on the secondary market, though. This is the sum of the eBay final value fee and PayPal processing fee (roughly 13%) and where friends with established eBay accounts could sell product between each other, at least up to the $2,000 limit.

  7. I would never buy gift cards on ebay. Too many horror stories. There are plenty of ways to meet minimum spend requirements without dealing with horrendous ebay and paypal customer service.

  8. The store with the smiley boxes might be Walmart.

    Not sure what the workaround is. Ive been told that you can buy 3rd party gift cards with Walmart gift cards. Excluding mastercard/visa and such.

    When I say you can, I mean the registers allow it. You might get a cashier that makes up rules as they go.

    My only experience is buying different size Walmart GCs with other Walmart GCs. Their website specifically allows it in the stores and the registers will allow it. Ive had cashiers say you cant and I just say “please try it” and it works.

  9. Shawn,

    Yes, we found out ‘the hard way’ as you and many others. Fortunately we were not holding any large $$ of those EBay gift cards at the time.

    Gift card purchases on EBay are always a bit precarious. I have shared some of my strategies with you in the past. Just this past Saturday I won a decision from PayPal over a total loss of $500 in value on a Hyatt gift card. Thankfully, law enforcement and our own investigation helped us prove to PayPal that the seller had conducted themselves criminally. But for a bit, we were sweating the outcome.

    I think every business should give some kind of reasonable notice when they decide to change their terms. On a side note, not sure if you were following it…but over $120,000 in Hyatt gift cards ‘disappeared’ from the market almost overnight a while back. Today the market hovers around $3,000, although it peaked today at over $10,000 but there are some shady offers out there. There are bad people out there. I think EBay (and PayPal) are tired of dealing with some of these issues and yes, as you say, they are tightening the reins.

    Another strategy crossed over the list…always looking for new ones and appreciate your blog in this area!

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