Gift Card Blog - ScripSmart

Why Keeping Your Gift Card In A Mobile App Is A Smart Idea

A couple of weeks ago I wrote about Jonathan's Starbucks Gift Card. In short, it was a gift card people were sharing; strangers would both add and reduce value in a pay-it-forward social experiment. The experiment brought up several questions, most about human nature; however, for me, it raised the question: are mobile gift card apps safe for consumers?

The Future Of Gift Cards Is Mobile

There is no doubt the future of mobile payments is bright and gift cards will be a big part of the action. The Starbucks Gift Card App has been tremendously successful with consumers and for good reason: they are easy to use, automatically keep the balance and best of all you'll always have the gift card in your pocket. However, the Jonathan's Card Experiment demonstrated one important vulnerability of mobile gift card apps which create bar codes to be scanned at the checkout counter.

Easy To Duplicate, Hard To Identify

The Jonathan's Card experiment worked because people could use an image of the Starbucks Mobile App which included the bar code of the gift card and use it for payment. This image is displayed on the right and if displayed on an iPhone, it looks just like the real application. This makes it difficult for the checkout clerk to determine what they are scanning is a duplicate or the original.

Creating this is image is very easy, just take a screen shot of the iPhone with the original mobile app. It's possible a smart phone could end up in the wrong hands, the card duplicated and the owner might never know.

Less, Not More Risk

It begs the question: if you add your gift card to a mobile app  which produces a bar code image of the gift card, are you increasing the risk of losing the value of your gift card to fraudulent use?

In short, the answer is no. After all, a person must still access the application on your mobile phone, take the image and send out the image to others. I don't see this as any more of a possibility than having a wallet lost or stolen. Furthermore, the Starbucks Mobile App has the option of being locked with a password and most smart phones can also be locked with a password. I can't say the same for a wallet.

If you own a gift card and there is a mobile app for it, I think it's a smart decision to use it. Just be sure to dispose of or hold the original plastic gift card in a safe place.

The Mobile Apps Version Of Scratch Off Security

When scoring gift cards, our algorithm likes to see a scratch off security code on the back of plastic gift cards. Its' a great way to prevent fraud. Perhaps a Mobile Gift Card App version of such fraud prevention would be an animated portion where the gift card bar code is displayed on the mobile phone. This would allow the checkout clerk another tool in determining if the bar code being show is authentic.

What do you think? Do you use mobile gift card apps when available? Are they better than keeping it in your wallet?

Facebook Gift Cards And Gift Card Laws: Buyer Beware

10/15/11 UPDATE: Facebook has updated it's Payment Terms. Facebook credits no longer expire. However, if unclaimed property laws apply to your Facebook Credits, they may be turned over to the state.

Earlier this year, major retail outlets such as Target and Walmart started selling the Facebook Gift Card. We just recently got around to reviewing the gift card and generating a Gift Card Score. There are a few important things to note if you are considering this product.

Facebook Credit Terms vs Facebook Gift Card Terms

The Facebook Gift Card is used to purchase Facebook Credits, the virtual currency used on Facebook to play games and buy virtual goods on Facebook. In short, the Facebook Gift Card does not expire or have any fees. Naturally, this is great to see. However, the gift card may only be redeemed in full to purchase Facebook Credits. After you redeem your gift card and convert it to Facebook Credits, the terms governing the value held by Facebook is significantly different.

Here are a couple of important thing to know when looking at the Facebook's Payment Terms:

• Facebooks says they "may redeem those credits by sending virtual gifts to your Facebook friends or donating the credits to a nonprofit organization of our choice..." if the Facebook Credits have been unused for three years.
• "If you deactivate your [Facebook] account and do not reactivate it within 6 months, or if you delete your [Facebook] account, you will lose any accumulated credits."

In other words, the value you place on a Facebook Gift Card could expire before the Federal minimum of 5 years.

I've sent a note into Facebook, but have not heard back. I'll update this post if I hear from them.

Gift Card Law Loophole

Such a policy begs the question: can a company circumvent gift card laws with simple semantics? Instead of calling the value held on behalf of the consumer credits and not dollars?

The laws covering virtual currency are unclear and on the cutting edge. In fact, Facebook is not alone in thier policy of expiring virtual currencies: While writing this post I received an email from iStockphoto informing me:

"This is just a reminder from us at iStockphoto that your iStock credits will be expiring soon. iStock credits expire within 1 year of the date of purchase. So the 2 credits that you purchased on 2010-10-01 will expire on 2011-10-01. "

That's just one year from purchase date. And while I never purchased a gift card to be converted into iStock credits, it's easy the similarities.

What are your thoughts on this matter?

Why State Gift Card Laws Still Matter

August 22, 2010 was a big day for gift cards. It was the effective date of the gift card provision contained within the Credit CARD Act of 2009. The new Federal Gift Card Laws provided enhanced protection for consumers and today is the one year anniversary of the changes.

One of the key aspects of the legislation was including bank-issued gift cards. These are gift cards with Visa, MasterCard, American Express and Discover logos. State gift card laws do not apply to bank-issued gift cards and they were among the worst when it came to fees and expiration dates.

After federal laws went into effect, some companies discontinued their bank-issued gift card programs because they were no longer profitable. Others, altered their programs to be even more consumer friendly than the law requires. In the end, it was a mixed bag, but I see the changes as a positive for consumers and the gift card industry.

State Gift Card Laws Still Matter 

In the end, gift cards are popular as ever. While the federal gift card laws enhanced consumer protection, there are several states with laws exceeding consumer protection provided by those set by the federal government. In other words, state gift card laws still matter and consumers should be aware of their rights.

For example, Oregon Gift Card Law was recently changed to allow consumers to receive a cash refund if the gift card has been used once and the balance is less than $5.00. These changes will be effective January 1, 2012. 

Expect more changes to come in the area of cash back laws. It's something not covered under the federal gift card protections, so it's an obvious enhancement. Also, here is a list of states offering cash back requirements for gift cards.

5 Tips To Avoid Risky Restaurant Gift Cards

Restaurant Gift Cards are one of the most popular types of gift cards. We love treating others to a great meal. It's also no secret running a successful restaurant is one of the most challenging business models. As a result, gift cards to a restaurants can be risky and those to smaller, local restaurants can be among the most risky.

Case And Point

Earlier this week, I was watching one of my new favorite television shows, Bar Rescue, and I was reminded of the risk involved when buying a gift card.

For those unfamiliar with the shows concept: Bar Rescue takes a Bar/Restaurant on the verge of closing it's doors, brings in an expert to make some dramatic changes and at the end of the week the business often has new branding, a better trained staff and a chance to fight another day.

The episode I watched rescued Swanky Bubbles in Philadelphia. The business was losing around $4,000 a month and was on the brink of closing it's doors. At the end of the show, there was an indicating the rehabilitation efforts did not pan out and the owners reverted back to the previous brand. After the show ended, I went to the Swanky Bubbles website and learned the sell gift certificates. Naturally, this would be a risky purchase.

While a gift card to a national restaurant chain such as the Chili's Gift Card is by no means immune to becoming worthless, typically there will be warning signs the business is in trouble and you'll have an opportunity to use your gift card before the doors close for good.

On the other hand, it can be difficult to determine the financial health of a smaller independent restaurant. Furthermore, when the owners decide it's time to call it quits, the doors often close abruptly and consumers are not given one last chance to redeem gift cards.

5 Gift Card Tips

While a smaller business may not be an open book when it comes to their finances or plans to stay in business, there are several things you can do to reduce the chances of loosing value of a gift ard while still support local independent small businesses:

1. Buy a gift card to a place your recipient visits frequently. This way the gift card is sure to used sooner than later.
2. If your familiar with the restaurant, take note of it's popularity. If the restaurant is empty during prime business hours, it's a sign the money may not be coming into the business.
3. Take note of the condition of the facilities. If things are in disrepair, the business might not be generating enough cash to reinvest back into the facilities.
4. Ask the staff: "How business has been?" or "How ling have you ben here?" If there is a revolving door of servers and bartenders it could be a sign tips are low or management is poor.
5. If the business is frequently out of stock for items on the menu, it could be a sign there is not enough money in the bank to properly stock inventory.

In the end, I'm not suggesting consumers avoid gift cards to local business or restaurants. Just be aware of the risks, make a smart gift card purchase and decrease your chances of the gift card becoming worthless with the tips above.

Community Starbucks Gift Card Terminated: Jonathan's Card

There's been an interesting experiment going on with a special Starbucks Gift Card called "Jonathan's Card". In short, it's a gift card which strangers were both adding and reducing the value. Think of it as a shared gift card. Simply by showing an image of the gift card's barcode (generated from Starbucks iPhone app), anyone could access the card.

Paying It Forward

I love paying it forward concepts like this and see the gift card as a natural fit. While sharing the value of a gift card is against the terms of the Starbucks Gift Card, Starbucks was actually cheering on this experiment. (It's great advertising for the product.) Looking at the twitter feed for the Jonathan's Card, there was a lot of activity of increasing and decreasing the value.

Fraudulent Use - Gift Card Terminated

Unfortunately, Jonathan's Card has been canceled by Starbucks. People can no longer add value or use it to pay for coffee. Starbuck's decided to pull the plug because some people were abusing the gift card and exploiting the nature of the program. (Not great advertising for the product.)

Apparently, Jonathan is not the only person who has clever ways to use a Starbucks Gift Card. Another developer wrote a script to check the balance of the card and transfer funds from Jonathan's Card to his own personal Starbuck's Gift Card. Apparently he transferred $625 in just 5 hours. Naturally, a person could easily sell the card to a number of third parties who sell discounted Starbucks Gift Cards and receive cash.

While this experiment is officially over, gift cards are consistently being used in new and interesting ways. This experiment also raises some interesting questions about the security of mobile apps which generate barcodes for payment; expect a post in the near future covering some of the security aspects of mobile payment applications.

Recycle And Get An Apple Gift Card

A growing gift card trend is paying consumers with gift cards instead of cash. I've written about Amazon.com paying consumers for used electronics with Amazon.com Gift Cards before and Apple offers a similar program.

In fact, recently Apple updated their Reuse and Recycling Program to include iPhones and iPads. In other words, you can receive an Apple Gift Card in exchange for recycling qualified "iPhone, iPad, and Mac or PC desktop and notebook computers".

Offering an incentive is a great way to get consumers to responsibly dispose of old and unwanted electronics. Naturally, by giving the consumer a gift card instead of cash, Apple can increase the dollar amount of the reward an be certain the money will be spent within the company.

Gift Card Tip

I price checked an original 16GB iPhone 3G in working order and was quoted $30; keep in mind, that number included free shipping to Apple. While $30 may not be a big help towards your next MacBook and the Apple Gift Card can't be used in the iTunes or App Store; the Apple Gift Card be used to purchase an iTunes Gift Card at the Apple Store.

5 Great Back To School Gift Cards

The beginning of the school year is in sight. Students across the country will be heading back to the
classroom and they're going to need school supplies and clothes. It's always nice to give the student in your life a little extra help in getting geared up for a successful school year. Here are 5 great option:

1. Zappos.com eGift Card - A great option for just about any age student. Zappos has a tremendous selection of shoes, apparel and bags. Bottom line, it's tough to go wrong with this option.

2. Walmart Gift Card - While most students may not be shopping at Walmart for shoes and apparel, Walmart offers a great selection of school supplies. If you're feeling practical, this one is for you.

3. Old Navy Gift Card - Known for affordable fashion, Old Navy is a great option for both guys and girls on a budget. And added bonus is it's also redeemable at Gap, Banana Republic, piperlime.com and athleta.com.

4. Apple Store Gift Card - Computers are an an important part of today's education system. Apple has become the hip kid's choice and you're sure to be a hit with your student when handing over a gift card to the Apple Store. Keep in mind, this gift card is not redeemable for music on iTunes; it's only redeemable at the Apple Store or apple.com.

5. Amazon Gift Card - Not sold on the gift cards above? Then Amazon.com may be the answer. They sell just about everything under the sun. You're student will be able to get everything from pencils to computers and everything in between.

ScripSmart has an entire section of the website dedicated to back to school gift cards. They're automatically sorted by Gift Card Score.

Do you buy back to school gift cards to help out a student in your life? If so, what types of gift cards are your favorite to give?

The Future Of Borders.com: Gift Cards Will Not Be Accepted

I've seen several articles in the press lately about the Borders brand living on and the notion of consumers still being able to shop at borders.com after the liquidation of all Borders locations. While this is likely true, it's also a bit misleading and important to keep in mind, there will be a new owner of the Borders brand and Borders Gift Cards will not be accepted by the new entity.

Here's Why Borders Gift Cards Will Not Be Accepted

In short, during the liquidation process, Borders will sell all company assets to help repay it's debts. Most of us think of assets such as: inventory, books, cd, shelves, charis, etc. However, the company will also sell it's intangible assets; things like the rights to it's brand name, logo, website and customer marketing lists. The new owner of the Borders brand will not be required to accept the existing Borders Gift Cards. They are merely buying assets of the company and not liabilities (gift cards).

This Has Happened Before And Will Happen Again

One only needs to visit hollywoodvideo.com to see this in action. The company went out of business for good in 2010. If you visit their website today, you'll see the same familiar logo and a link to shop now. It turns out NECA Inc. purchased the rights to the Holllywood Video brand. Often times a company who purchases the brand name of a defunct company is interested in the traffic it can drive to their existing business. In fact, if you click on the 'Shop Now' link, you'll be directed to NECA's Amazon shop. And guess what, Hollywood Video Gift Card are not accepted for payment.

So, to sum it up: if you own a Borders Gift Card, go out there and use it ASAP. It will soon become a worthless piece of plastic.