Is It Time To Stop Mailing Fully Activated Gift Cards?

Written by Evan Schuman
June 3rd, 2010

True story: A North Pole postal worker was indicted last week, accused of stealing Christmas gifts from the mail. The defendant is actually a postal worker in Fairbanks, Alaska, but the town she lives in is honestly North Pole, Alaska. But this story didn’t catch our eye because of the image of one of Santa’s elves turning Grinch-like. It was what she stole: Wal-Mart $25 physical gift cards being sent via snailmail.

This begs the question: Why are we still permitting the mailing of fully activated gift cards? People aren’t sending $20 bills in the mail anymore, so why are they still sending the plastic equivalent?

When someone sends someone else a gift card, why not first send an E-mail alerting the recipient to the card’s imminent arrival and have that E-mail include a password to activate the card after it arrives? If such an approach is adopted, these are just some of the benefits retailers (and their customers) would see:

  • Heads Up That The Card Is Coming:
    One reason theft of gift cards is relatively easy to get away with—assuming the thief doesn’t get caught at the moment of thievery, as apparently Mrs. Clause was—is that there is often no one in a position to notice the theft, even though quite a few players are involved.

    The gift-giver pays for the card and sends it away. Given the rarity of thank you cards today, the sender could simply assume the card arrived. The retailer would have no reason to suspect anything. The bank and/or the card brand would similarly have no reason to get suspicious, because the payment was completed before the card was sent. And if the recipient isn’t expecting the gift card, it could feel like the perfect crime, with no one in a position to sound the alarm.

    The E-mail heads-up would provide a mechanism for the recipient to quickly flag everyone when a card went missing.

  • An End To Not Knowing Who’s Using Your Gift Card.
    One of the longstanding retail complaints about gift cards is that the chain typically has no idea who is using its cards. Retailers know who pays for their cards, but the value is in knowing who received them. Is it a potential new customer? Can you pitch the recipient products based on what he/she uses the gift card for?

    Gift card exchanges have given retailers a small peek into knowing who receives the cards, but could E-mail alerts work a lot easier and at almost no cost? As a service (free or paid), the retailer could send an E-mail to the recipient to guarantee arrival. The customer is asked to provide the recipient’s name, E-mail address, snailmail address and phone number.

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    2 Comments | Read Is It Time To Stop Mailing Fully Activated Gift Cards?

    1. Steve Sommers Says:

      When we initially developed our gift card application, we included a feature to place funds on a card but keep the card deactivated with the reason code “ID check required.” This ID check would only apply to the first time the gift card is used. While we thought it was a nice feature, a vast majority of the merchants using our application bypass the feature or worse, complain that they have to turn off the feature (it’s on by default). What we have found is that merchants are hesitant to do anything that may slow down the check-out lines. Having a clerk verify the ID of a customer the first time a gift card is used can slow down the lines so this feature is a very hard sale to the merchant.

      A second issue is various state laws. Many states inadvertently give advantages to the merchant to keep the gift cards anonymous. Things like monthly fees, expiring funds and unused funds are handled differently for cards with names attached vs. anonymous. I’m not certain, but I believe that in California and Texas, if a name has been attached to a card and the cards has not been used for some period (2 or 4 years I think), the funds get turned over to the state so they can try to return the funds to the rightful owner (yeah, right!). So for merchants in these states, sticking the “$20 I Owe Anyone” in the mail is less of a liability than the inactive gift card attached to a person.

    2. Lee Says:

      I certainly wouldn’t want to provide my recipient’s info to get a gift card. If, however, I could get the email, and forward on, that would be useful for the times the card is mailed, vs given in person.


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