Disclosure: 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. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities. Links in this post may provide us with a commission.
PayPal Protections Gift Cards
I write about a lot of eBay gift card deals here on the site, so I thought it would be important to cover some important changes that PayPal will be putting into place on June 25, 2016. These changes effect both buyers and sellers of gift cards and are in place for any PayPal transaction, not just eBay ones.
Changes to Gift Card Protections Coming
As of June 25 PayPal is updating their user agreement. In a notice sent out to users (you can see it here), they notate a few changes among which two are of interest to us:
REVISED SECTION 11.5
We’re making a clarifying change to Section 11.5 and adding a new item that will be excluded from PayPal Seller Protection. The new item that will not be eligible for Seller Protection is:
Items equivalent to cash, including gift cards.
SECTION 13.3 Ineligible Items
We’re also clarifying the exclusion for items equivalent to cash to now include stored value items such as gift cards and pre-paid cards.
Actual Exclusions for Buyers & Sellers
Based on the above notes, I felt confident that gift cards will be excluded from protections on both the buyer’s side and the seller’s side. Just to be safe though, I also went to the actual user agreement and looked at the sections referred to. Here is what I found:
11.5 Items/transactions not eligible for PayPal Seller protection. The following are items/transactions not eligible for PayPal Seller protection.
- Intangible items, including Digital Goods, and services.
- Claims or Chargebacks for Significantly Not as Described.
- Items that you deliver in person, including in connection with In-Store Checkout.
- PayPal Direct Payments.
- Virtual Terminal Payments.
- PayPal Business Payments.
- Items equivalent to cash including gift cards.
13.3 Ineligible Items. Payments for the following are not eligible for reimbursement under PayPal Purchase Protection:
- Real estate, including residential property
- Vehicles, including motor vehicles, motorcycles, caravans, aircraft and boats
- Significantly Not As Described Claims for Custom-made items
- Payments on crowdfunding platforms
- Items prohibited by the PayPal Acceptable Use Policy
- For INR claims, items which you collect in person or arrange to be collected on your behalf, including items bought through In-Store Checkout at the retail point of sale
- Industrial machinery used in manufacturing
- Anything purchased from, or an amount paid to, a government agency
- Stored value items such as gift cards and pre-paid cards.
- Gambling, gaming and/or any other activity with an entry fee and a prize.
- PayPal Direct Payments
- Virtual Terminal Payments
- Personal Payments
While I highlighted the gift card sections, I suppose it is a good idea as a buyer and a seller to know exactly what is excluded from protections.
My guess is the amount of fraud when dealing with gift cards has been to much for PayPal and thus they are protecting themselves. I don’t think these changes would keep me from purchasing from the bigger sellers on eBay (GiftCardMall, SVM, PayPal Digital Gifts, etc.), but I definitely would not buy a gift card from a normal seller nor would I purchase pre-owned gift cards. I also will think twice before paying with PayPal when buying gift cards from other sources. While there may still be some credit card and eBay protections, it probably isn’t worth the hassle.
Fraud is seemingly so widespread now in the gift card world that changes like these are inevitable. Companies are eating a ton of money and they feel they must institute consumer unfair policies in order to change that from happening. It is definitely unfortunate, but not surprising. Will these new changes keep you from purchasing gift cards on eBay or elsewhere where you pay with PayPal? Let us know in the comments.
HT: Laptop Travel
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.