Shipping Gift Cards And Thinking About Getting Insurance? Don’t!

When reselling anything for profit the primary two things on your mind should be profit and risk.  For selling gift cards, both of these factors come into play if you find yourself in a situation where you need to ship cards out.  The costs of shipping will directly eat into your profits, but you also don’t want to skimp and end up with the shipment getting lost along the way.  I’m going to take a look at 3 major companies you can use to ship gift cards and what their liability and insurance policies have to say in regard to gift cards.  If you thought loading up on insurance to protect your multi-thousand dollar shipment was a good idea, you might want to take a closer look.  Not all hope is lost though, there’s still probably a way to save your investment in the event it goes missing.

The Big 3 Shippers

USPS, FedEx, and UPS are the first three companies that come to mind when I want to ship something.  Let’s take a look at each of their shipping insurance options.  Many other smaller carriers also exist, but I would imagine the pattern you’ll see below won’t vary very much between them.

USPS

If there’s one thing the US government can do pretty well, it’s move mail across the country reliably and for a reasonable price.  This is especially true for standard size envelopes that cost a mere 49 cents to ship anywhere in the US.  Another thing I like about USPS is their straight forward Priority Mail envelopes and boxes.  For a flat fee, you can ship anything that fits with tracking and it will arrive in 2 days or less most of the time.  They’ll even ship you a bunch of the envelopes and boxes for free!  UPS and FedEx might beat the price for certain weights and certain destinations, but come nowhere close to the simplicity of USPS’s Priority Mail.  USPS allows you to purchase insurance on most of their products other than basic First Class mail, but you should probably stay away if you’re shipping gift cards.

USPS spells out their insurance policy in regards to gift cards pretty clearly on their website:

4.3 Nonpayable Claims
Indemnity is not paid for insured mail, Registered Mail, COD, or Express Mail in these situations:
[…]
r. Negotiable items (defined as instruments that can be converted to cash without resort to forgery), currency, or bullion valued in total at more than $15 per shipment sent by Express Mail, except under 4.2c..

That means regardless of how many gift cards you are sending and what they are worth, the most you’ll get back from an insurance claim is $15.  Considering the insurance typically costs extra money on top of the regular price, there is NO reason to ever opt for it when shipping gift cards.

I even stumbled across a real example of someone being burned by not knowing the policy on gift cards, but who can blame them.  Most people don’t have time to read pages and pages of fine print before they ship something.

FedEx

This is an easy one, FedEx, as spelled out in their Service Guide for 2015, does NOT offer insurance on either their Ground or Express shipping options.  In addition to not offering insurance they also call out that you can’t even declare the value of the package is above $1,000 if the contents consist of gift cards:

Stocks, bonds, cash letters or cash equivalents, including, but not limited to, food stamps, postage stamps (not collectible), traveler’s checks, lottery tickets, money orders, gift cards and gift certificates, prepaid calling cards (excluding those that require a code for activation), bond coupons, and bearer bonds.

I’m not exactly sure what the declared value can help you with, but I wouldn’t count on them paying out anything if the cards go missing.  They do mention you can purchase insurance from a third-party service, but I think you’ll have a tough time finding one that will insure your gift cards for a reasonable price.

UPS

According to this page on ups.com, UPS will cover the declared value of your package for free if the value is <$100 or for a cost if the shipment is worth more:

UPS covers the loss or damage, at no extra cost, for up to $100.00 on shipments with no declared value. If the value of your goods exceeds this amount, you can declare up to $50,000 per package (subject to terms and conditions) by entering the declared value when you create a shipment on ups.com. Please note that these prices are in U.S. dollars.

This sounds like a good start, but let’s check the fine print.  As expected, UPS also considers gift cards to be essentially worthless and will only cover the cost to replace a gift card shaped piece of plastic.  You heard that right:

Phone Cards, Tickets, Gift Cards, and similar. UPS’s liability for a Shipment containing a phone card, ticket (such as event or airline ticket), gift certificate, gift card, coupon, or other similar printed matter with an exchange value is limited to the cost (which shall not include any amount of the value attached to the card, certificate, or coupon, or similar printed matter) of replacing the physical card(s), certificate(s), or printed matter, not to exceed $100 per Package or per pallet. In no event shall UPS be liable for the face value of any phone card, ticket, gift certificate, gift card, coupon, or similar printed matter.

 

Once again, you’re not going to get an insurance payout if they lose your gift cards somewhere in transit, regardless of how much you may have paid to insure them.  All three of the big carriers in the US feel the same way about gift cards, but they do have a pretty good point which I’ll explain below.  Before I move on though, hopefully you got the message: Do NOT buy insurance when shipping gift cards because you’ll just be throwing your money away.

Not All Hope Is Lost Though

Despite most shippers not paying out in the event they lose your gift card, there is still a couple steps you can take to reduce your risk when shipping cards.  First, ALWAYS write down the numbers on the back of the card before shipping them.  Both the card number AND pin should be recorded somewhere safe in the event the gift cards don’t reach their destination.  Every brand will be slightly different, but most cards contain language to the effect of: “If a gift card is lost or stolen, a replacement card will be issued for the remaining balance if proof of purchase is provided.”  There’s a few caveats there, but the good news is it might be possible to get a replacement in the event the card goes missing in the mail.  The replaceability of the cards is one of the reasons it doesn’t make sense for shippers to pay out for them.  You could essentially double your money if they lost the card because you would be reimbursed for the value and still be able to request a replacement.

Firstly, if the card is usable online it’s always possible to simply buy something with the remaining balance.  You’ll probably take a loss on the transaction, but it’s better than getting nothing.  Second, if you have the proof of purchase from an authorized seller, making a call to customer service should get you the full value of the card back.  This is useful if you bought the card directly, but not so much if you received it second hand.  I would probably still give it an shot with the card number and pin in hand along with a claim that I “lost” the receipt, but your success will depend on the CS rep you get on the phone.  As a last ditch effort, you might even be able to take the card number and pin to the store directly and either use it to make a purchase or get a replacement card.  If the computers allow manual entry of the card, you might have success with a little smooth talking.

The worst case scenario is that not only does the card not get to its destination, but lands in someone’s hands who decides to use it.  Unfortunately, in the event that the value on the card is drained before you have a chance to get a replacement or use it yourself, you’re probably out of luck.  The brand won’t issue a replacement and your only chance at maybe getting your money back would be filing a police report.  Depending on where you’re shipping from and to, I wouldn’t even know where to start with the process, but it is an option in extreme circumstances.

At the end of the day, there’s no guarantee with shipping cards through the mail, but you do have a few options in the case something goes wrong.  I’ve had 100% success with the gift cards I’ve shipped out (>20 shipments), but do end up selling the majority of them digitally which allows me to avoid the problem completely.  I’ve shipped some of them with simply a postage stamp, while others have had tracking included by the company I sell them to who paid for the label.  There’s several options for shipping and everyone’s own situation will call for a different one, but hopefully you learned something about the risks involved with shipping gift cards.


20 thoughts on “Shipping Gift Cards And Thinking About Getting Insurance? Don’t!

    1. SaveYa provides prepaid labels with tracking for their bulk sellers, but only under certain sell thresholds.

      If you’re creative with Cardpool, you can also get free tracking. Check out Chasing the Point’s post on the subject: https://saverocity.com/chasingthepoints/gift-card-churning-save-even-postage/

      I’m not sure about some of the other ones, but I do know Gift Card Zen covers shipping for bulk sellers. I’m just not sure if they also include tracking.

  1. if I understand correctly, you typically do first class shipping if it is at your cost. Never tried priority ones? And for first class, we are not allowed to use the priority envelops, right? Thanks!

    1. I’ll typically do Priority if I’m sending over $1k worth of gift cards, but first class for smaller amounts.

      You are correct in that Priority envelopes can ONLY be used for priority shipping. Anything else and you’ll have to buy/find your own envelopes.

  2. Hi Noah, I’m the one who emailed you about this. Thanks so much for responding to me! This was very helpful. The workers at the USPS I was at weren’t sure about any of this, and your post clears it up.

  3. Thanks for this informative post. Assuming you purchased the gift cards using a credit card, any thoughts or experiences on asking the credit card company for help? One thing that comes to mind is maybe the lost/stolen benefits of the credit card can kick in?

    1. I have used the credit card benefits on an ebay order of gift cards that was sent to me. I had to prove that I exhausted my other options to get a refund (opened case with ebay/paypal, contacted seller, etc.), but in the end they refunded me what I paid for the order.

      I’m not sure what kind of benefits the credit card would offer if you were sending cards out (using it for postage), but when buying gift cards, I imagine most of the buyer benefits would remain in place. At the very least, it’s worth a shot if you can’t recover your money/cards a different way.

  4. My true but horrible experience: giftcardrescue.com mailed me an empty envelope (suppose to have $4700 value gift cards in the envelope) and claimed that they returned me all my cards that they rejected to sell for me. The Brand merchandise refuse to reissue the cards even the cards contain language to the effect of: “If a gift card is lost or stolen, a replacement card will be issued for the remaining balance if proof of purchase is provided.” And I can provide all the receipt and card copy. The Brand merchandise claims that I mailed the card for the purpose of sell, so it doesn’t count as lost or stolen by complying Federal gift card rules. They did me a favor to freeze them(indeed it’s a favor for me,because nobody can redeem it and all the money still on the cards when freezing. I see the merchandise benefit from it, since nobody can use it if I don’t find the cards and it belongs to merchandise forever). I suspect that giftcardrescue.com never mailed my cards except the empty envelope. It doesn’t seems there is any issues with ups, usps or FedEx when other human evil involves into it(such as: purposely mail an empty envelope, this case doesn’t count as lost card etc..). In this kind of case, lawsuit may be the best solution to get all or partial of the money back. I would appreciate very much and suggestions how to proceed lawsuit and hope our MS community can provide more information or consult to persuade lawsuit.

    1. That sounds like an awful experience. I wonder if you claimed they were simply “lost” as opposed to “lost in the mail” you might have had better luck getting them replaced. Unfortunately, I don’t have any good advice as to how to pursue getting your money back, but maybe someone else has gone through something similar.

  5. On a fortunately much less horrible note, I gave my husband a $25 BP gift card which he immediately lost. I had the number and receipt, however BP “does not replace” anything and it does say so on the card. So lesson learned, at least to read the terms. Though maybe cards lost while reselling don’t qualify anyway, as above.

    1. I don’t have any BP cards handy, but there is similar language on the Shell one I have: “Except in certain circumstances, the value on this Card will not be replaced if the Card is lost, stolen, or destroyed.”

      I wonder what those “certain circumstances” are?

  6. The reselling of GC’s for Miles/Points is way too risky. I.E. you send a $100 GC (I know you do much more), and what are you getting in return? 100 Miles/Points with usually $2 on the high end but you ‘re risking $80 (say you bought at 20% discount). I am not sure if the risk/hassle to rewards earned is worth it.

    1. It’s certainly not for everyone, but I’ve found a way to make it work. That hypothetical $100 gift card I bought for $80 would end up getting me ~$4.50 cash profit on average along with the $1-2 worth of points/miles. As I’m able to sell most of the cards digitally, it cuts down on risk pretty significantly (and mailing cards isn’t as risky as you might think, most mail makes it to it’s destination with no problems).

      Each person has their own risk vs. reward tolerance though, and it won’t make sense for everyone.

  7. wow, thanks for referring us to this back article…. If I’d seen this before my recent miserable experience with SVM, I NEVER ever would have taken the risk. If you’re right, even if the shipment was misdirected to me at no fault of my own, then I’m totally screwed. (unless ebay really does guarantee it…. )

    Lesson learned, never ever buy gift cards w/o pins through the US mail. Right down there with financial suicide. (and no, a PO Box is NOT a fail safe — had one of them long ago, and often got somebody else’s mail in my box…. )

    1. I’m not sure what you mean with the PINs?

      Even if the gift cards were shipped with PINs, they’d be right on the back of the gift card and usable in the same way by anyone who happened to intercept your mail.

      1. Hey Noah,

        I first heard about gift card churning from Greg at a FTU in Seattle. I’m interested in getting started and hope to become a bulk seller/buyer. Other than just “reading” by surfing the web, what a good way to really learn how to get into the game while minimizing as many ‘beginner’ mistake as possible?
        Your help would be greatly appreciated.

        1. Hey Chris,

          I have an intro post explaining some of the basics here:
          http://moneymetagame.com/churning/my-latest-get-rich-slow-scheme-gift-card-arbitrage/

          Beyond that, I don’t know of any great resources for ramping up into the game. The basic formula is to find the rates that different exchanges are buying cards at (GiftCardWiki.com is a great tool for this if you aren’t a bulk seller), then try to find ways to buy the different brands at lower costs than that.

          Doctor of Credit, Miles to Memories, and FrequentMiler (Greg’s site) often post the best gift card sales, but everyone has different rates they can sell at so they may not be profitable all th time. Most of my cards are sourced from ebay, local grocery stores (check the big brand apps like Kroger and Safeway), and Amex Offers.

          Just try to keep your eyes out for any chance to buy a retail gift card at a discount, then check to see what you can resell it for. After doing this for a while, you’ll get a feel for what the different brands are really worth and might stumble upon some great opportunites to flip cards for points and profit.

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