Gift cards: which is "better / safer"? physical or electronic?

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rjbraun
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Gift cards: which is "better / safer"? physical or electronic?

Post by rjbraun » Thu Jul 19, 2018 4:23 pm

I just got off the phone with a (major) merchant and learned that electronic gift cards I had purchased online were used fraudulently, thereby depleting my balance to zero. :(

I'm not a big fan of gift cards, though I do buy them and, it seems, increasingly so :shock: . Sometimes, I will buy a gift card for a friend. Not ideal, but better than taking the time to buy something that they likely won't want anyway, as many of my friends are trying to "declutter". The other time I buy gift cards is to get points, e.g., for Chase Freedom's 5x grocery category last quarter we bought gift cards to max out the $1500 limit.

The fraud issue I just discovered with my gift card may turn me off enough to never buy a gift card again, but are the physical cards considered more secure (assuming one doesn't lose them)? When I buy a physical card I try to keep the physical receipt with the card, as a way to protect against any future discrepancies about the card balance.

I read somewhere that the electronic gift cards are better because they will go directly to the recipient, at least if the alternative is to have a physical card mailed via post and the envelope gets misplaced or overlooked. That said, we gave a sizable electronic gift card (so large multiple cards were sent) to a relative. Yet, he never received the (electronic) cards, even though we received e-mail confirmation they were delivered. Fortunately, he let us know, but others may not given the potential awkwardness of the situation.

I know people on the forum have said to deplete a gift card asap due to the fraud issues. If that's really the case, I just can't see the justification to ever buy a gift card again. :confused

So, is it best to simply give up on gift cards entirely? Or, is the fraud risk manageable enough and, if so, which is better: physical or electronic gift cards?

ETA: A friend literally sent me a gift card from a specialty shop this week. Guess I better plan to spend it right away.
Last edited by rjbraun on Thu Jul 19, 2018 4:34 pm, edited 1 time in total.

UpperNwGuy
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Re: Gift cards: which is "better / safer"? physical or electronic?

Post by UpperNwGuy » Thu Jul 19, 2018 4:28 pm

I won't buy gift cards. I don't think they're safe, and I feel that there is too much opportunity for "breakage."

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Pajamas
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Re: Gift cards: which is "better / safer"? physical or electronic?

Post by Pajamas » Thu Jul 19, 2018 4:35 pm

Cash or a check are preferable to a gift card in almost any situation. Merchants love gift cards because they have a high percentage of non-redemption.

ResearchMed
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Re: Gift cards: which is "better / safer"? physical or electronic?

Post by ResearchMed » Thu Jul 19, 2018 4:37 pm

rjbraun wrote:
Thu Jul 19, 2018 4:23 pm
I just got off the phone with a (major) merchant and learned that electronic gift cards I had purchased online were used fraudulently, thereby depleting my balance to zero. :(

I'm not a big fan of gift cards, though I do buy them and, it seems, increasingly so :shock: . Sometimes, I will buy a gift card for a friend. Not ideal, but better than taking the time to buy something that they likely won't want anyway, as many of my friends are trying to "declutter". The other time I buy gift cards is to get points, e.g., for Chase Freedom's 5x grocery category last quarter we bought gift cards to max out the $1500 limit.

The fraud issue I just discovered with my gift card may turn me off enough to never buy a gift card again, but are the physical cards considered more secure (assuming one doesn't lose them)? When I buy a physical card I try to keep the physical receipt with the card, as a way to protect against any future discrepancies about the card balance.

I read somewhere that the electronic gift cards are better because they will go directly to the recipient, at least if the alternative is to have a physical card mailed via post and the envelope gets misplaced or overlooked. That said, we gave a sizable electronic gift card (so large multiple cards were sent) to a relative. Yet, he never received the (electronic) cards, even though we received e-mail confirmation they were delivered. Fortunately, he let us know, but others may not given the potential awkwardness of the situation.

I know people on the forum have said to deplete a gift card asap due to the fraud issues. If that's really the case, I just can't see the justification to ever buy a gift card again. :confused

So, is it best to simply give up on gift cards entirely? Or, is the fraud risk manageable enough and, if so, which is better: physical or electronic gift cards?
We try not to use them anymore.

In addition to what you are discussing, there is the potential problem that the recipient will lose it or just forget there is a remaining balance. I wonder how much is "left behind" just by the "forgetfulness" factor.

And there is one vendor we do a fair amount of business with, a small business owner.
Each year, he sends out a holiday card/thank you, and includes a gift card... for a restaurant chain that we probably wouldn't enjoy IF there was even one near us. I can't imagine we are alone.
(Any suggestions of how to tactfully mention something, withOUT indicating that much of what he spent on those might be wasted each year? We can't find anyone to give it to, either, no doubt because there aren't any nearby.)

RM
This signature is a placebo. You are in the control group.

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Pajamas
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Re: Gift cards: which is "better / safer"? physical or electronic?

Post by Pajamas » Thu Jul 19, 2018 4:45 pm

ResearchMed wrote:
Thu Jul 19, 2018 4:37 pm
We can't find anyone to give it to, either, no doubt because there aren't any nearby.
You can sell or exchange them online but it might not be worth the trouble.

ResearchMed
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Re: Gift cards: which is "better / safer"? physical or electronic?

Post by ResearchMed » Thu Jul 19, 2018 4:54 pm

Pajamas wrote:
Thu Jul 19, 2018 4:45 pm
ResearchMed wrote:
Thu Jul 19, 2018 4:37 pm
We can't find anyone to give it to, either, no doubt because there aren't any nearby.
You can sell or exchange them online but it might not be worth the trouble.
Thanks.
We actually hadn't thought of that.

But you are right, it's not enough to fuss with, even at full price, and I assume there'd be some discount, or why would anyone buy it, etc.
(Dealing with strangers with anything financial on the Internet isn't high on our list to start with...)

My main concern is that I just feel really badly for this *very* nice small business owner, assuming he does send them out to all of his customers/clients (or maybe those that have returned at least once or something like that - although it might be most "effective", if it is at all, for the first-timers??).

RM
This signature is a placebo. You are in the control group.

cpumechanic
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Re: Gift cards: which is "better / safer"? physical or electronic?

Post by cpumechanic » Fri Jul 20, 2018 8:52 am

I use gift cards frequently but always buy them online at a discount. I won't buy them unless they are at least 15% off, and I stick to restaurants that I go to and use them to take my wife out to eat. I have had instances of fraud, but since I bought the cards second hand I call the on line merchant and they issue a refund for the un-used amount. That "feature" of the online sellers is a huge advantage over buying the gift cards directly from a merchant.

I focus on e-gift cards, since those are shipped same day, and I have an email record of the purchase and an electronic copy of the gift card.

Several of the online sellers now offer a 1 year guarantee and so I can buy a presold gift card with confidence that as long as I use it within 1 year, I have insurance against fraud.

Of course several of the "less reputable" online sellers have 30 or 45 or 60 day guarantees... I stay away from these re-sellers unless the discount is large, and my need/use is immediate and full value.

Downside is yes.. they are a pain to keep track of.. and drain 100%.. but there are apps you can install on your phone and then enter or scan the gift cards onto your phone and then add notes if/when you use each one.

Of course you have to remember to do that.

I also discovered that several of the fast food chains (Wendy's, Steak and Shake) allow you to "load" the gift card amounts directly onto the phone app, and when doing so the gift card is completely used up and fully available on your smart phone app so risk of fraud goes to zero.

I have even gone so far as to order a Cabela's gift card at 20% off , while shopping in Cabelas for things like ammunition that is on sale.
The e-gift card arrives on my cell phone, and I 100% use it up when I check out of the store.

So..as they say YMMV but I am generally happy with a 15% of more discount on items I am going to consume anyway.
Carrabba's is almost always available for 15% off, and if you buy a card at small value, it is fully used on the first visit.

Regards (PS.. I am retired.. so keeping track of this stuff is kind of a hobby).
:sharebeer

CPU
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Pajamas
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Re: Gift cards: which is "better / safer"? physical or electronic?

Post by Pajamas » Fri Jul 20, 2018 9:59 am

ResearchMed wrote:
Thu Jul 19, 2018 4:54 pm

My main concern is that I just feel really badly for this *very* nice small business owner, assuming he does send them out to all of his customers/clients (or maybe those that have returned at least once or something like that - although it might be most "effective", if it is at all, for the first-timers??).

RM
Since it is a business rather than a personal relationship, I would let them know you can't reasonably use the cards because there's no place to use them near you so he can either send something different or not send anything in the future.

You might check to see if you can use the card at another brand under the same company. For instance, any Darden Restaurants cards can be used at any of the brands. They seem to have one universal card now but even when they didn't that was true. The Gap works the same way.

https://www.darden.com/gift-cards

rjbraun
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Re: Gift cards: which is "better / safer"? physical or electronic?

Post by rjbraun » Fri Jul 20, 2018 10:06 am

Thank you to everyone for the helpful feedback.

Just to clarify, the gift cards I bought that were used fraudulently were purchased online at staples.com (and generated 5x in Chase UR points). They were Whole Foods gift cards, and the matter is being "investigated" by the grocer. I am supposed to hear back in the next day or two what resolution may be possible.

I guess I will wait and see how things turn out. In general, I suspect that if one is to go the gift card route, it's best to plan to use them very soon after purchase (as advised by CPU), which is generally my approach as well. An exception has been where I receive a card from a specialty-type merchant and don't have an obvious purchase in mind. Still unclear about how to make gifts to friends where "hard cash" would seem kind of unseemly, imo, and where an actual gift would also be problematic.

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Pajamas
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Re: Gift cards: which is "better / safer"? physical or electronic?

Post by Pajamas » Fri Jul 20, 2018 10:21 am

rjbraun wrote:
Fri Jul 20, 2018 10:06 am
Still unclear about how to make gifts to friends where "hard cash" would seem kind of unseemly, imo, and where an actual gift would also be problematic.
Used to be a check in a card with a note including a clearly optional suggestion of what to spend it on. "Treat yourself to a nice dinner on us or use it for whatever you want." People also used to give gifts with a gift receipt included (no dollar amount printed on it) so the item could be returned or exchanged.

Giving a gift card instead of cash might be slightly better for the giver as far as being "unseemly" but it is worse for the recipient in all respects.

rjbraun
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Re: Gift cards: which is "better / safer"? physical or electronic?

Post by rjbraun » Fri Jul 20, 2018 11:03 am

Pajamas wrote:
Fri Jul 20, 2018 10:21 am
rjbraun wrote:
Fri Jul 20, 2018 10:06 am
Still unclear about how to make gifts to friends where "hard cash" would seem kind of unseemly, imo, and where an actual gift would also be problematic.
Used to be a check in a card with a note including a clearly optional suggestion of what to spend it on. "Treat yourself to a nice dinner on us or use it for whatever you want." People also used to give gifts with a gift receipt included (no dollar amount printed on it) so the item could be returned or exchanged.

Giving a gift card instead of cash might be slightly better for the giver as far as being "unseemly" but it is worse for the recipient in all respects.
Fair point, thanks. I did employ the check route and also cash route recently. The former instance was with a family member and in the latter case I just gave cash as I had trouble getting the intended gift card! It was a "tip" for a hotel concierge (but one where I felt more of a personal tie), so I felt fine with giving cash and I'm sure she was just as happy to receive it as well. But, yes, I basically enclosed a note in both cases along the lines of what you suggested.

Yes, I will aim to make the gift card I am giving to a friend this weekend, as a housewarming gift, to be my last (gift card "gift").

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Re: Gift cards: which is "better / safer"? physical or electronic?

Post by Ron Ronnerson » Fri Jul 20, 2018 12:18 pm

rjbraun wrote:
Thu Jul 19, 2018 4:23 pm
So, is it best to simply give up on gift cards entirely? Or, is the fraud risk manageable enough and, if so, which is better: physical or electronic gift cards?
I have found that the fraud risk has been manageable enough. However, it's an assessment of reward vs. risk. I've primarily bought physical gift cards though do purchase electronic ones through Amazon at times. I immediately transfer the electronic Amazon gift cards to my Amazon account and use up the balance shortly thereafter (and never keep a large balance). I try to use physical gift cards in one use. For me, this is often, but not always, easily accomplished.

About 5 years ago, I purchased a $100 Target gift card from Safeway. After using about $35 of it, I found the rest of the balance had disappeared. Target researched it and said it was a "mobile transfer." I don't know what that means and no one was able to properly explain it to me. Getting credited for the fraud proved to be too much trouble so I shrugged off the loss and moved on. I'd purchased maybe $15k worth of gift cards that year and typically got somewhere between 15%-35% off. I stocked up on gift cards when I was able to get closer to 35% off. These gift cards were for purchases I would make myself at places like gas stations, restaurants, Amazon, department stores, etc. (it was not manufactured spending). I made thousands of dollars back then so $65 was a small price to pay for the reward gained.

I don't buy gift cards unless I can save at least 10% because, to me, that is the cut-off point when factoring in the risk of loss along with hassle of carrying a gift card around. The method I used to employ to get the large discounts on gift cards has largely disappeared so I just use credit cards for most purchases now.

In short, the risk is totally worth it for a large enough savings. Everyone must determine for themselves what percentage that is.

Edit: corrected typo.

armeliusc
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Re: Gift cards: which is "better / safer"? physical or electronic?

Post by armeliusc » Fri Jul 20, 2018 12:28 pm

We continually having this issue with trying to give someone out of appreciation, but just cannot (especially my spouse) get over the 'unseemly' factor of giving a check, let alone actual cash. Giving a 'thing' is out of the question (I hate it when someone give me a 'thing', most likely it just clutters my place). Even a 'thing' with receipt is a lot of hassle for the recipient. Gift cards have their own problem (as already mentioned). So the closest thing is a gift card to common shopping places like Target, Kroger, or Amazon.com (if we know they shop there) where the recipient likely shop there anyway.

If there are better suggestions, we'd love to know!

AC

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Pajamas
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Re: Gift cards: which is "better / safer"? physical or electronic?

Post by Pajamas » Fri Jul 20, 2018 12:35 pm

armeliusc wrote:
Fri Jul 20, 2018 12:28 pm

If there are better suggestions, we'd love to know!
I would make a real effort to get over the idea that giving a check is unseemly. It is not appropriate for all situations, for instance at the holidays for a child's teacher, but when in the right situations such as for a wedding or graduation, it is perfectly acceptable. It is also the most appreciated gift overall.

A gift card is just a restricted gift of cash anyway. A check is not that different from a general gift card such as one from Visa or AmEx. I had an employer who would give AmEx gift checks of a few hundred dollars as a thank you to employees on occasion and always just deposited them in a bank account. Right now I have a Visa gift card a bank sent me as an apology so I have to make two payment transactions at my next trip to the grocery store. I would have preferred a credit to my account but then they couldn't have sent it in a card with an apology.

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munemaker
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Re: Gift cards: which is "better / safer"? physical or electronic?

Post by munemaker » Fri Jul 20, 2018 12:49 pm

I found a mall gift card when walking around the local mall, good for any store in the mall.

I asked at mall lost and found if anyone had reported losing one...no. Also talked to the mall gestapo...no report.

I checked the balance online and it had about $200 on it. Owner had not registered so no way to get back to them.

Checked mall lost and found again in 2 weeks and no report of losing the card.

If you are going to lose a gift card, help the finder get it back to you.

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Re: Gift cards: which is "better / safer"? physical or electronic?

Post by mervinj7 » Fri Jul 20, 2018 12:53 pm

munemaker wrote:
Fri Jul 20, 2018 12:49 pm
I found a mall gift card when walking around the local mall, good for any store in the mall.

I asked at mall lost and found if anyone had reported losing one...no. Also talked to the mall gestapo...no report.

I checked the balance online and it had about $200 on it. Owner had not registered so no way to get back to them.

Checked mall lost and found again in 2 weeks and no report of losing the card.

If you are going to lose a gift card, help the finder get it back to you.
One of my interns found a VISA gift card in the cafe. So far, no one has asked for it at the Lost and Found. How long should I tell him to wait before it's to use? 1 week seems reasonable to me.

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Re: Gift cards: which is "better / safer"? physical or electronic?

Post by rjbraun » Fri Jul 20, 2018 1:05 pm

munemaker wrote:
Fri Jul 20, 2018 12:49 pm
I found a mall gift card when walking around the local mall, good for any store in the mall.

I asked at mall lost and found if anyone had reported losing one...no. Also talked to the mall gestapo...no report.

I checked the balance online and it had about $200 on it. Owner had not registered so no way to get back to them.

Checked mall lost and found again in 2 weeks and no report of losing the card.

If you are going to lose a gift card, help the finder get it back to you.
Apart from the scenario described here, this post makes me wonder how registering a gift card might help. If I register a card, will someone attempting to fraudulently use the card required to provide personal identification or something?

Note: These last two posts would seem to suggest that keeping one's eyes out for stray gift cards could be lucrative!
ETA: munemaker: I applaud your diligence in trying to return the card to its rightful owner!

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Re: Gift cards: which is "better / safer"? physical or electronic?

Post by GoldStar » Fri Jul 20, 2018 1:17 pm

I sent e gift cards to a bunch of employees one year and one of them told me he found it in his SPAM folder. I then had to awkwardly reach out to the rest of my team and tell them to check their SPAM folders if they didn't get my gift message from Amazon - it was awkward and several hundred dollars of gifts were almost lost (if not for the one warning me I would have quietly wondered why no one sent me a thank you).

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munemaker
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Re: Gift cards: which is "better / safer"? physical or electronic?

Post by munemaker » Fri Jul 20, 2018 3:58 pm

rjbraun wrote:
Fri Jul 20, 2018 1:05 pm
If I register a card, will someone attempting to fraudulently use the card required to provide personal identification or something?
When I looked up the balance of the found gift card online, using the number and pin on the card, there was a place for registration information by the owner. I don't recall what info that was, but in this case it was blank. Presumably I could have seen the owner's name and possibly address and phone, and contacted them to return the card.

Not sure, but I don't think it would help prevent someone else from using the card if they found it.

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Re: Gift cards: which is "better / safer"? physical or electronic?

Post by alpenglow » Fri Jul 20, 2018 5:04 pm

I'm at the point that I'm totally done with gift cards, both physical and electronic. I recently had $700 worth of gift cards from a major home retailer compromised. They were physical cards in my basement with the pins still covered. They were sent directly from American Express. After a couple of weeks worth of phone calls and complaints, they did replace the cards (the retailer, not AMEX). Last week I discovered that a $50 GC from a major pharmacy was also compromised. Same deal. Physical card with pin covered. I am still trying to get that money back. Whatever the case, I've decided that maxing out Discover and Chase Freedom categories with gift cards isn't worth the risk. :annoyed

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Re: Gift cards: which is "better / safer"? physical or electronic?

Post by michaeljc70 » Sat Jul 21, 2018 11:48 am

I haven't had any problems with gift cards. I typically buy them at a discount and use them ASAP. I buy both electronic and plastic. Amazon gift cards are good to give because you can add them to your account immediately. They will be used for future purchases until they are used up. If you buy gift cards from third parties (like the discount sites), usually they guarantee the value for only 45 days or something like that. I check the card when I get it and try to use it in that time period. Otherwise, you are on the hook for any losses due to fraud.

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Re: Gift cards: which is "better / safer"? physical or electronic?

Post by criticalmass » Sun Jul 22, 2018 8:24 am

I keep gift cards organized and stored like a baseball card collection. Then I can always find the right card before shopping and use them quickly. I also keep any receipts of purchase in the same manner.

The threat of fraud is real and getting worse. A classic method is fraudsters grab cards on shelves, and note the numbers and magnetic stripe data. PIN covers are pasted back on or replaced with a new one, but often this is unnecessary since the PIN is on the mag stripe. Then they put the card back in store and check regularly for activation. Once that happens, they simply duplicate the magnetic stripe data on a plastic card and shop or trade.

Visa and MasterCard gift issuers enhanced security after massive fraud with improved packaging and using separate activation numbers/barcodes from the account numbers, but they are still vulnerable. Note gift cards don’t have a chip to protect against simple magnetic stripe duplication.

Other methods exist for eGift certificates. Be careful and use them quickly, regardless of a physical card or not.

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Re: Gift cards: which is "better / safer"? physical or electronic?

Post by 47Percent » Sun Jul 22, 2018 9:12 am

I try my absolute best NOT to give any store or general cc gift cards. There is some atrocious statistics about the percentage of gift cards that go unused.

I either buy them an actual gift, or give them Amazon printed gift card. The benefits are:

a) Never expires
b) No service fee of any kind
c) Because it is printed, it is both physical and electronic - with both advantages.
d) The broadest options to use the gift amount
e) Recipient doesn't need to decide what to get immediately; they can deposit into their acct.
f) You, the person giving the gift, can track if it's been actually used

While all of the above are important, I find the last one absolutely a must for reasons mentioned before.

I have personally reminded folks 6 months or one year after the gift that they haven't used the gift, and they would thank me all over again. It is like giving another gift at no cost!

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Re: Gift cards: which is "better / safer"? physical or electronic?

Post by tunerunner » Sun Jul 22, 2018 10:17 pm

I use them frequently. Easy to get from my local grocer and on top of the fuel savings (I rarely pay for gas) I can also use a credit card with a higher rate of return than I would have directly with the merchant. If I know I may return something I may refrain from using them though.

I just paid a bunch of medical bills with Visa GC's. Even with the fees the gas and cash back is worth it. I used them right away and I didn't have to give the slimy medical billing companies my actual credit card number.

YMMV though...it's not for everyone. Takes some effort on your end.

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