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.
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.
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.
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.