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Why CC doesn't simply forbid Gift Card purchasing?

Frequent Contributor

Why CC doesn't simply forbid Gift Card purchasing?

If buying prepaid cards or gift cards like Vanilla Reload counts as "cash advance", why doesn't CC explicitly say so in the T&C?

 

Take CSP's T&C as an example:

 

"You do not earn points on balance transfers, cash advances, cash-like charges such as travelers checks, foreign currency, and money orders, any checks that are used to access your account, overdraft advances, interest, unauthorized or fraudulent charges, or fees of any kind, including fees for products that protect or insure the balances of your account. There is no maximum number of points that you can accumulate in the program. "

 

It already says"such as travelers checks, foreign currency, and money orders", and it sure can easily add "gift card" but none of the CC company  chose to do so. So one can argue "gift card" isn't included in it. Though the CC issuer can end their business with you without any reason.

 

As far as I know, I havn't see any CCs' T&C include "gift cards", so what's the reason?

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Message 1 of 69
68 REPLIES
Valued Contributor

Re: Why CC doesn't simply forbid Gift Card purchasing?

A  gift card is "cash-like", so it is covered. Funding bank accounts is obviously a cash advance. They, for whatever reason, just choose to let people do it and still earn points. Citi is the only one that I know that will recognise a financial institution purchase as a cash advance.

Message 2 of 69
Valued Contributor

Re: Why CC doesn't simply forbid Gift Card purchasing?

Because more than a few AMEX customers, especially businesses have a reason to purchase gift cards, and AMEX doesn't want to alienate card holders especially lucrative corporate customers.

 

Examples would include companies that want to give out gift cards to employees, partners as rewards and incentives, large companies could buy 100's of gift cards at a time, most retailers would prefer to have people buy giftcards with a credit card than a check  even if its a bussiness account. its a lot more risk, and corporations surely don't want employees carrying $10,000 in cash into a store.  Or the Grandma doesn't know what to give her grandson Johnny for Christmas so picks up a $100 gift card. Both are legitimate purchases done by valued AMEX customers. 

 

 

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Message 3 of 69
Frequent Contributor

Re: Why CC doesn't simply forbid Gift Card purchasing?

Because the majority of people don't charge up multiple times their monthy income per month on gift cards and buy them for legitimate purposes to give as gifts. Due to "abuse" or however you see it, this may end up pushing lenders to excluding them, since we know lenders can see at least some of what was in a transaction. I'd see this as unfortunate but if the choice is between nerfing my rewards or excluding my $500 in gift card gifts a year, I would take excluding the gift cards.



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Message 4 of 69
Established Contributor

Re: Why CC doesn't simply forbid Gift Card purchasing?

James you are correct my company give amex cards for performance rewards and as prizes in meetings and such.  AMEX is the corporate card choice so all of the cards are bought with amex.


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Message 5 of 69
Super Contributor

Re: Why CC doesn't simply forbid Gift Card purchasing?


w20031424 wrote:

If buying prepaid cards or gift cards like Vanilla Reload counts as "cash advance", why doesn't CC explicitly say so in the T&C?

 

Take CSP's T&C as an example:

 

"You do not earn points on balance transfers, cash advances, cash-like charges such as travelers checks, foreign currency, and money orders, any checks that are used to access your account, overdraft advances, interest, unauthorized or fraudulent charges, or fees of any kind, including fees for products that protect or insure the balances of your account. There is no maximum number of points that you can accumulate in the program. "

 

It already says"such as travelers checks, foreign currency, and money orders", and it sure can easily add "gift card" but none of the CC company  chose to do so. So one can argue "gift card" isn't included in it. Though the CC issuer can end their business with you without any reason.

 

As far as I know, I havn't see any CCs' T&C include "gift cards", so what's the reason?


Basically like what b_seeker said.

Most people have a real daytime job / career and can't be bothered to do stupid stuff like this for some quick money.

And there are legitimate purchases with gift cards (i.e for birthdays, etc). 

abuse is not limited to just gift cards. People abused UR Mall, ShopDiscover, Send money feature, Bill pay, etc. Some still continue to do so even today.

At the end of the day they end up crying and blaming the whole world because their accounts got closed.

 

 

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Message 6 of 69
Super Contributor

Re: Why CC doesn't simply forbid Gift Card purchasing?


w20031424 wrote:

As far as I know, I havn't see any CCs' T&C include "gift cards", so what's the reason?


There are many legitimate reasons to purchase gift cards—for employee bonuses, customer rebates and gifts.

 

The issue here isn’t really purchasing gift cards per se, but fraud and financial compliance risks when they’re purchased at amounts exceeding 3, 5, or even 10 times someone’s reported income.  The effort and resources necessary to ensure Federal regulatory compliance (willful blindness for Financial Inst carries severe penalties) is cumbersome enough for a profitable customer; for an unprofitable one, it would be sheer folly.

Message 7 of 69
Regular Contributor

Re: Why CC doesn't simply forbid Gift Card purchasing?

Easiest thing to do is to just use your cards as you normally would in everyday life and you'll avoid these problems 99.9% of the time. If you need to get a gift for your best friends wedding and can't decide what to get, don't worry and get hima $100 Bed Bath and Beyond gift card. That's a lot different then stopping into CVS every 3 days and buying $504.95 of 'purchases'.

Or having a stated income of $40,000 but spending $9,000 a month on your credit cards. Or having a $5,000 line but putting 4x your CL throughout the month through it.
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Message 8 of 69
Senior Contributor

Re: Why CC doesn't simply forbid Gift Card purchasing?

In a word: People. Smiley Happy

 

They're always gaming the system. Look at how long the US Mint thing was going on.


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Message 9 of 69
Mega Contributor

Re: Why CC doesn't simply forbid Gift Card purchasing?


enharu wrote:

 


Basically like what b_seeker said.

Most people have a real daytime job / career and can't be bothered to do stupid stuff like this for some quick money.

And there are legitimate purchases with gift cards (i.e for birthdays, etc). 

abuse is not limited to just gift cards. People abused UR Mall, ShopDiscover, Send money feature, Bill pay, etc. Some still continue to do so even today.

At the end of the day they end up crying and blaming the whole world because their accounts got closed.

 

 


 

OK, this is why it is not so black and white.   A certain poster here, with a name like enharu, recently posted a question about using Discover to transfer $1000 a month to his girlfriend to get ~ $120 cash back a year.  Is this a real transaction?  No, pure manufactured spend.   Is it a lot of "abuse"?  Not compared to some, but to those that don't do it, it is, and could lead to Discover reducing cash back, or stopping the send cash process, ruining it for those who use it for legitimate transactions.

 

Now the poster was advised not to do it, and so probably didn't, but the question arose, so I view this as a classic example of "Let him that is without sin cast the first stone" type of stuff.

Message 10 of 69