Last year, roughly $8 billion> worth of gift cards went unused by those who received them. Last weekend, during the televised college football marathon, fans were pitched an alternative: Send in your unwanted cards, and get spend-anywhere cash in return.
But the offer from gift-card reseller CardWoo was unusual in the growing secondary marketplace for such cards. Typically, gift-card resellers make an offer often for 60% of the card's value or more -- and consumers can decide whether to mail in their cards and take the cash.
Not CardWoo. Launched in July by the same company that owns mail-in gold reseller Cash4Gold, CardWoo asks consumers to send in their gift cards first, then issues a check for a value it deems fair. Customers don't know how much they'll get until the check arrives. Don't like the amount? Send the check back within 14 days of its issue date and your cards will be returned.
It's similar to the model used by sister company Cash4Gold (the sites share several top executives), and a premise send us the goods, and we'll send you a sum we think is right that makes some consumer advocates nervous. "You need to be very wary of anyone who tells you they will give you money, but not how much," says Ira Rheingold, the executive director of the National Association of Consumer Advocates, in reference to the CardWoo and Cash4Gold models. And, in fact, in a test, SmartMoney.com found that CardWoo's offer was significantly lower than its competition.
CardWoo's chief operations officer, Harry Rosenfeld, said the company uses the mail-in model (rather than upfront offers) because the value of a particular card can change, sometimes daily, depending on who is willing to buy the card and for how much. CardWoo, like others, earns money by reselling the gift cards to other customers looking to buy unwanted cards at a discount for more than they pay but less than face-value. And some customers don't know what amount remains on a partly used gift card, he says, which makes it difficult for CardWoo to estimate the value without the card in hand.
CardWoo has not faced the same barrage of grievances as Cash4Gold and its mail-in, turn-gold-into-cash program, according the Better Business Bureau, which has not received any complaints about CardWoo since it started tracking the company at the end of December. Consumers have alleged in hundreds of complaints made to states attorneys general and the Better Business Bureau that Cash4Gold lost packages and sent checks too close to the deadline to decline the offer for sellers to request a revised amount or the return of their gold.
A spokesman for Cash4Gold's parent company, Green Bullion Financial Services LLC, based in Pompano Beach, Fla., says the company has been cooperating fully with investigators. A representative of Florida's attorney general, which is investigating 86 complaints against Cash4Gold, says the company now "appears to be making a good faith effort to conform to a better business model."
To test card resale services, SmartMoney.com asked for upfront offers from 10 gift card-exchange websites for three $25 gift cards, one each for Macy's (M),
Other customers may not be so lucky. Green Bullion spokesman Evan Nierman says CardWoo's official policy does not allow negotiation, although reps will occasionally oblige. "Less than 2% of customers have ever said they were unhappy with an order," says Nierman, adding that comparisons to other sites' offers for gift cards isn't accurate because CardWoo adds extras like package insurance and tracking, worth about $3.