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Gift Card Reselling Chargeback – A Painful & Expensive Lesson
Earlier this year in an effort to diversify my manufactured spending, I started reselling gift cards. At first I started with some Amex Offers and eBay deals and then graduated to more advanced methods. In the end I determined that it probably wasn’t something I wanted to dedicate a lot of time to, however I’m glad I now have the skills to jump on great deals.
- Related: Why Gift Card Reselling Probably Isn’t Worth the Time & Effort
- Related: Advanced Gift Card Arbitrage & Reselling
One of the crazy things I did twice when I was really getting into reselling was buying from one exchange and selling to another at a higher price. THIS IS A TERRIBLE IDEA! In fact, after I did it twice in two days I decided never to do it again, because there is simply too much that can go wrong, the profit doesn’t justify the risk and I don’t want to ruin my relationship with gift card resellers.
The Red Lobster Problem
One of the two purchases I made was 10 X $100 Red Lobster gift cards. I then turned around and sold them to another company. When those cards arrived at the company I sold them to, two of them were invalid. This means they were probably purchased with a stolen credit card. Yikes! Thankfully I had purchase protection and I was refunded for those two cards. The other 8 seemed to be fine.
That was back in June and then yesterday I received this notification from the company I sold the cards to:
A Takeback has been issued on one of the gift cards we acquired from you, after the merchant (Red Lobster) has reported it as invalidated. The affected card is listed below.
Takeback Amount: $91
One of the cards they bought from me was eventually invalidated and they charged me back the $91 they paid me for it. Ouch! My first thought was to contact the company from which I purchased the card. Unfortunately they only have a 90 day buyer’s guarantee.
The company I sold the cards to has the same 90 days buyer’s guarantee (for whoever they sold it to), so hopefully that period will be over soon and I will be in the clear. I really hope all of the other 7 cards are valid and that no one else gets ripped off.
While I actually learned this lesson long ago, this just shows you how a bad decision can bite you in the behind! Since I made a somewhat decent profit on the sale of these cards, this chargeback brings me to about breakeven on the transaction. If any more cards go, then I am out some serious money!
Here are a few key takeaways that everyone should follow when it comes to gift cards & exchanges:
- Never buy from one exchange to sell to another.
- If a card is priced significantly lower that the competition on a site like Raise, it is probably fraud since they want to unload the cards quickly.
- If you are buying from an exchange, then use the cards immediately. I only buy gift cards from exchanges when I have immediate plans to use the entire balance. Your purchase is only protected for a limited time.
Part of life is living and learning and understanding that some “deals” just aren’t worth the risk or effort. Thankfully only one card has gone bad (actually 3 of the 10 have) and I hope/pray that nothing else comes from this. Either way, it is a lesson learned and a mistake I won’t make again. Hopefully my pain can help some of you in the future! Happy gift card hunting!
Miles to Memories has partnered with CardRatings for our coverage of credit card products. Miles to Memories and CardRatings may receive a commission from card issuers.