Carlos Loyan loves gift cards. He finds shopping so joyless that the prospect of handing out gift cards to friends and relatives for the holidays has been a major relief.
Loyan even went so far as to buy himself a $500 gift card for the one place he does like to shop, Home Depot. He spent only $400 on the card, purchasing it from a company that sells discounted gift cards.
But when he went to Home Depot to redeem it, the card was declined because the balance was $0.
Luckily, Loyan got his money back from the seller, which had guaranteed the value of the card.
Despite that harrowing experience, Loyan, co-owner of Gold-X-Change in Santa Rosa, has decided to take a risk and get into the growing business of buying and selling gift cards.
The company advertised on Craigslist last week that it would buy gift cards and its first acquisitions were for Best Buy, Ross Dress for Less, Trader Joe's and Dunkin' Donuts.
“I'm so fresh into this, I don't know the scams people do,” Loyan said. “I'm hoping that the majority of customers are decent people.”
To protect the business, co-owner Jake Young has drawn up contracts for gift card sellers to verify their ownership and the value of the card.
“It's become pretty popular,” Young said of the gift card market. “It's a big industry, billions of dollars.”
As Californians climb out from under a mountain of Christmas presents this month, exchanging unwanted knickknacks or ill-fitting sweaters, many will hit the stores to use new gift cards they've received or they'll find ways to swap the plastic currency for more coveted cards.
In the 2013 holiday season, consumers were expected to spend an estimated $29.8 billion on gift cards, according to the National Retail Federation. Other estimates are higher. Including retail, ecommerce and general gift cards like Visa and Mastercard, Americans were expected to load $118 billion onto gift cards in 2013, according to CEB, a research and advisory firm based in Arlington, Va.