Here’s a puzzle: why are there Southwest Airlines gift cards selling on eBay for more than face value? I’ve gone down a rabbit hole, I have some theories, but I’ve love your help to parse through what’s actually going on here.
Here are a couple of examples where the seller is offering $100 gift cards at substantially over face value:
My first thought was there’s fraud going on here, but what kind exactly? These two listings don’t have have actual sales (yet). They are fixed-price Buy It Now listings, not auctions. And looking into the buyers I actually suspect we may not see sales.
- The $162.43 seller also has $50 and $25 gift cards and each denomination is offered at 63% over face value, so there’s a formula involved.
- Both of the $100 Southwest gift card sellers appear to have very broad catalogs of thousands of products
- One verified review left by a buyer on oen of their products says the item was drop shipped via Amazon.
It looks like they might be (1) importing Amazon or another retailer’s catalog, (2) applying a fixed markup, (3) posting thousands of listings, (4) then buying the item only once an eBay sale happens. That’s against eBay’s rules but apparently happens quite a bit.
The seller may not even be paying attention to the fact that this is a gift card that’s listed for more than its face value. And it doesn’t matter – they just maintain a very broad set of listings and something may hit.
Let’s say the $169.43 price yields a buyer, then the seller nets about $140 after fees. They go buy the $100 gift card and keep $40. But nobody actually buys, right? Umm…
- This $200 Southwest Airlines gift card listed at $269.99 apparently has 2 sold!
- And here’s a $100 Sony Playstation gift card at $179.99 supposedly has 80 sold.
- Or what about a Visa gift card at $179.99 with 35 sold.
So why would gift cards sell for more than face value? If the reported transactions are real, it seems like it could be stolen credit cards or compromised financing accounts where the fraud is quickly draining that account and turning it into gift cards which are harder to trace and easier to abscond with. In some sense, that hypothetical ‘buyer’ is paying $0 and doesn’t care what price they’re charged.
And then the seller could just as easily be:
- a reckless drop shipping who is listing everything they can find and buying the item after they’ve sold it – in which case they’re exposed to chargebacks
- a wink and nod seller charging a fraud premium to do business with scammers
- an actual participant in the scheme
It occurred to me that some of the purchases could be desperate buyers using Klarna or PayPal Credit to buy something they can’t do with cash or a credit card, but at least with Southwest you can go to their site and buy using similar credit products. That might be a more plausible explanation, then, for buying Visa gift cards (whether out of desperation or as part of a credit bust out scheme).
I could also imagine that it’s just money laundering through sham or inflated transactions, but at $100 or $200 it’s hard to imagine that’s very efficient.
So I suspect that the pricing explanation comes down to a drop shipper arbitraging another retailer’s pricing, and the reason someone might actually pay above face value is most likely cashing out a compromised payment account. But that’s just my best guess given the evidence I’m seeing, and my certainty isn’t especially high. So to those of you who know more about this area, what do you think is happening here?
My first thought was that I cannot believe people would be that stupid as to pay that much more than the face value for the cards. But, then I started to think back to before I retired. I do believe I came across many of them in my career before I retired. They are out there.
“There is a sucker born every minute” says PT Barnum
Just look at are electorate:)
There could be some effort to buy ebay gift cards (which, incidentally are being phased out) with ill gotten cash and “purchasing” items which the “seller” (maybe the seller’s cousin) never provides?
But also recall Hanlon’s Razor: https://en.wikipedia.org/wiki/Hanlon%27s_razor (“Never attribute to malice that which is adequately explained by stupidity.”). There are 350,000,000 people in the US. This seller might makes some coin off the occasional dolt.
Certainly a head scratcher! Just random spitballing, maybe the seller ran out of cards and rather than end the listing that drops them to the bottom of the search result algorithm, they just temporarily inflate the price so no one will buy until they restock?
Highly advised that you never buy any physical card from anywhere or anyone. Buy it yourself via their site, your credit card site etc.
The gaming ones are foreign accounts wanting to use them on US marketplaces.
It’s simple…eBay is a reseller site. They buy at X and sell at X plus….the sale is completed ONLY by DUMMIES!!!!
Sometimes drugs, guns/ammo and other prohibited items (even Rx baby formula) are sold on eBay this way. Sellers instruct buyers to purchase a specific eBay item then ship whatever illicit item has been agreed upon elsewhere. Sellers purposely overprice whatever item is described in the eBay post so that others do not mistakenly purchase the item and reveal the scheme.
Whatever this is, it has to be shonky, surely!
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I’ve seen this approach many times on Ebay where items are listed for significantly higher prices than new items. My take is money laundering.
I think ebay allows offers. So could it be possible the item actually sold below face value through the make me an offer function.
@M1K, I think your theory that this is a way to disguise and sell elicit products is the most plausible. Thanks.
It’s money laundering. The sellers may be in on it, or they may have just independently figured out that there are buyers for gift cards at huge premiums. But they sell because the buyers are either using a stolen credit card and will take whatever they can of real value that they can get their hands on. Or they are trying to get illicit funds into the system by buying something hard to trace that can be turned into money, and don’t care about getting 60 or 70 cents on the dollar. Either way, as a seller of a legitimate gift card, your risk is great, because these often lead to chargebacks if a stolen card number was used.
As a 25-year ebay seller, I think M1K is correct. It is something no one will mistakenly buy, so it is a cover for some other item that cannot be sold otherwise.
@ Gary — I suggest buying one and reporting back.
Have you seen this with other airlines?
@Gene — Got’em!
Not to worry, Ryan Cohen will clean this all up by listing GME’s BTC once he has control. Didn’t think of that one ? Great way to move something like a nuke or North Korean battleship by overpaying for bitcoin on ebay.
Either M1K figured it out, or it some Economics or Marketing Professor running a study.