The Pains of Gift Card Reselling: PayPal Digital Gifts Hacked Edition

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PayPal Digital Gifts iTunes Hacked Cards
A recent PayPal Digital gifts iTunes promotion on eBay.

PayPal Digital Gifts iTunes Hacked Cards

I have covered the topic of gift card reselling (arbitrage) quite a lot on this blog. We have a post on the basics, more advanced methods and I have posted a bunch of reselling deals along with analysis over the years. With all of the recent eBay changes, much of the opportunity is now gone, but there are still good deals occasionally.

As with anything in life, you can do everything right and still end up with headaches in the end. For example, I personally only source gift cards that I resell from legitimate companies. Those would be companies that are selling the cards first hand to me as the buyer. I don’t buy second or third-hand cards because the potential for fraud is too high.

Bad PayPal iTunes Cards

Even with buying cards direct, there can still be issues. In July/August it seems that PayPal Digital Gifts was hacked. I had purchased iTunes cards from PPDG through eBay and then immediately sold them to a company I have a bulk relationship with. The profit on these sales was small, but I earned 5X Ultimate Rewards on the purchase and given the ease of flipping them it made sense.

Then, about a week ago I received an email with the subject, “Must Read: PayPal Digital Gifts Breach and What It Means for You” from the company I sold the cards to. It goes something like this:

Hi Shawn Coomer, as you are probably aware, PayPal Digital Gifts experienced a security breach that led to many gift cards being compromised through no fault of your own…

Initially, our investigation determined the breach affected only iTunes cards that were sold in August. However, today it became apparent that the extent of the compromised cards reach as far back as July, though we still have not seen any brands other than iTunes affected.

Later tonight almost all of our sellers will receive “bad card” emails, which will advise you that cards have been compromised and their payout amounts will be reconciled. (Language indicating a replacement fee is not applicable in this instance.)

The good news is that all reports from sellers indicate that PPDG has been responsive and timely in issuing refunds, so there should be no financial loss to any of our sellers, but we recommend requesting the refund as soon as possible.

Also, we fully know that this is not the fault of anyone but PayPal and this is not held against anyone’s selling account whatsoever.

We sincerely apologize for this inconvenience and appreciate your cooperation and understanding in this PayPal fiasco.

And then not long after I received three “bad card” emails for cards bought on July 20, 2016. Through no fault of my own, I was suddenly out $255. I am working with PayPal to get my money back, but this highlights how you need to be prepared to both float money and for things to go wrong.

Final Thoughts

I have bought and sold enough gift cards and earned enough rewards that the occasional headache like this still makes sense I think, however I really feel that PayPal Digital Gifts is a terrible company considering they still have not contacted me (or anyone else that I know of) to disclose this now evident hack. Either way, you should never overextend and should probably be expecting the occasional issue which can cause delays in getting your money or even trigger a clawback.

Have you gone through the refund process with PayPal Digital Gifts on a hacked card? What has been your experience? Let us know in the comments.


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20 COMMENTS

  1. Funny you should ask… Just had a nightmare scenario that may repeat itself with others. My purchase was made partially with Ebay gc and Ink cc. I filed a claim immediately (Saturday 10/1)and was given a case number and said the refund would be there within 3 business day (Wednesday 10/5) Not there. Called again, in progress, 3-5 business days. Called yesterday and got a whole bunch of incompetent people that told me that PayPal would not compensate me but that I would have to go to the manufacturer – iTunes. I ended up having to explain to the foreign based workers that isn’t how data breach refunds work in America (long story short) and after 3 can I speak with your supervisor and explaining what my filing a CFPB claim would do, I finally got to an American supervisor who understood the gravity of CFPB and was not thrilled with the beyond botched handling of my refund.

    Furthermore, PayPal itself decided to get in on the act and let’s say they have screwed themselves. Since my card was used and the refund went back to the card, and since there is one day left to use the ebay gc to buy any other gc, I immediately went online and put in my orders for gc. logged into PayPal with $0 to pay and PayPal refused to process and said go back to vendor. I called PayPal. Their risk associates and then later managers (plural) that I spoke with realized that there was no way I was ever going to get the money off of this gift card due to the PayPal risk system. Essentially, the money is there, but their risk systems will never let me use it. My ebay gc is eternally damned to being suspicious — how does it get reloaded? MUST BE FRAUD!!! Couldn’t be anything as simple as a refund. So, their risk system has issues.

    I think the final risk manager that I spoke with fully realized that with my only resolution to go to the CFPB — and being well versed in how to work that strong arm of the government, this was a losing proposition for them. I was VERY lucky. PayPal took the loss and cashed me out of my ebay card since their system will never let me use it ever again. The funds posted today.

    Total time suck involved: 5-6 hours. (I was multi-tasking most of the time but still… multiple phone calls, multiple levels of risk managers and an iron clad resolve that I will not be delayed or denied and the CRPB was one keystroke away.

    In the end, PayPal did the right thing refunding my money – first to my ebay gc and then to my PayPal account since I the money onthat Ebay GC was stranded forever – but boy was it a rocky and tumultuous road getting there and several wtf moments of is this really happening? PayPal still has a few things that they need to do in tweaking their risk system to be able to accommodate refunds to gift cards – especially the refunds that they themselves have issued!!!

    Stay the course. The refund process is not so simple when those ebay gift cards are involved.

  2. I had my Outback gift cards hacked. PPDG said it was Outback and Outback said it was PPDG. I was out about $100. I purchased for my personal use and not for resale. I read on other blogs that PPDG had a pretty massive hack but not sure how accurate that is. If true, PPDG has not owned up to it.

    I enjoy reading your posts. Good luck!

  3. Had the exact same situation as you Shawn. Had 3 iTunes, probably from the same time as well. Got that same email too.

    I called PPDG and within 5 minutes the guy had processed a refund back to my INK card. It posted a few days later. For as much of a PITA they are, they issued the refund without much hassle. Granted, I agree they’re a terrible company (for many reasons) and they definitely kept us in the dark and I’m sure many others who may not even be aware. You have to wonder how many lawsuits we’ll see against PayPal/PPDG over the coming years…. they definitely deserve a few coming their way.

    • What number did you call for PPDG? I’ve called several times and waster an hour and get get anyone competent that understands the situation.

  4. Perhaps you should attempt to actually earn a real living instead of scamming people with egift/paypal gift cards antics. You have ruined more deals with your avarice…hope you lose it all.

    Have a nice day

  5. My suggestion it’s to contact

    Executiveoffice@paypal.com

    They are a real thing and it may take a day or two before you hear from them, but anyone that is in a hopeless spot, well give em a shot. But as with all paypal people, you piss em off and you will regret it. I wouldn’t make any threats until they flat out say no. This team has more reach than all of the rest.

  6. Is Paypal Digital Gifts a company of its own or is it part of the larger Paypal or Ebay (I get the two confused. Supposedly they’re two companies now, but I still think they’re Siamese twins.)

  7. shawn, are these made by incomm? take a look at my experience with them with the paypal my cash card – https://www.skeet-rolling-incomm.com/skeet-rolling-and-incomm-complacent-with-paypal-scam-my-cash-fraud/

    incomm is completely incompetent. they basically have the worst security model i’ve ever seen, and after their own employees stole my money, their investigative team exercised the worse investigation i’ve ever seen. i have proof of all my claims, yet it still took lawyers threatening a federal suit to get them to finally give me my money back 10 months later. the problem has still not been addressed either.

  8. The exact same thing happened to me – bought 3 iTunes gift cards and sold to the same bulk seller. All I did was hit the link for request a refund, put the explanation as hacked gift cards, and a day or 2 later I had my refund. No needed phone calls or wasted time!

  9. Call it reselling or not, tiny profit with high risk is not a good business model to me. When I want to run up some points, and it’s a sunny day, I stroll to Staples and on the way back home I stop at the Post Office. The exercise is good for me. Costs a bit less than $8 per 1K UR, it always works, I can add up all the numbers in my head, and until it breaks I’m not going to fix it.

    • So you think that investing a ton more time into buying money orders at your post office and depositing into various banks/CU is less risky than buying and flipping gift cards from PPDG? Speaking of value, I have beach front property in Iowa I’d sell you at a great price.

  10. Me and a couple of my friends lost thousands of dollars on Hyatt gift card bought through CardCash. CardCash would not refund us the money since it had been 45 days and our credit card companies would not refund us either. I am surprised you haven’t written about this yet.

    • I’m having the same problems with CardCash and am out $500 in Delta GC’s and CardCash is refusing to help, claiming the “45 day guarantee”. On day 46 the GC’s were drained.
      I desperately need some advise, before I go the small claims route – any one out there ?
      I’m so surprised no one is reporting on this scam !

    • Why would you buy that much of Hyatt GCs from CC if you had no intentions of using it right away. Sorry that you lost out but that Hyatt GC issue was reported by a lot of bloggers a few months of ago. Try contacting Hyatt and report the issue, seems that was the solution to this issue as it seems to be a Hyatt GC hack instead.

    • I actually have a Hyatt gift card post coming up specific to some cards I purchased first hand (not through a reseller like Card Cash) that were hacked. It is tough when buying from resellers since the cards are third hand.

  11. This site called cardcash.com also hosed me for $1500 when i made a purchase for hyatt gift cards. They have very suspect business practices, and once i asked them what had happened, they told me that there was a risk vs reward to purchasing on their website, even though it doesnt state anywhere that there is a risk vs reward. Their customer service is terrible also, beatinf around the bush and not offering to help. An article on them would benefit a lot of people that frequent this website or any other travel blog!

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