Is Payless ShoeSource trying to recover from bankruptcy by discouraging customers from ever redeeming their gift cards? A Consumerist reader bought a discounted gift card from a card exchange site, then was annoyed when his local Payless store wouldn’t accept it. The retailer says that it accepts virtual gift cards in its stores, but only from certain vendors, and only after taking very specific anti-fraud measures.

So, you want to buy and sell gift cards online

Reader Steve contacted Consumerist about his issue with a gift card for Payless ShoeSource that he bought from a marketplace. He believed that Payless was up to some trickery and refusing to accept gift cards that customers had bought in good faith. We found that wasn’t the case, but ruling that out means doing some research before you buy discounted gift cards online.

Before we get into Steve’s story, it’s important to understand gift card exchange sites and how they work. Ostensibly, these sites exist so people with gift cards they don’t want can exchange them for either cash or a card that they do want.

Would you rather have a $25 Outback Steakhouse card that you’ll never use because you’re a vegan, or twenty bucks in your PayPal account?

However, they can also be used to sell gift cards that have either been stolen the old-fashioned way, or that scam victims have used as currency. There’s a reason why iTunes and Amazon gift cards are popular forms of currency for paying scammers: There’s always a market for them, and they can be resold quickly.

Marketplaces can also be used to sell gift cards obtained from shoplifting. In this scam, people steal from brick-and-mortar retailers, then return the goods for gift cards and re-sell those gift cards for cash. They might sell those cards online, including in online marketplaces.

From some sites, you can buy just a code instead of a physical card. That means the gift credit can change hands instantly, without having to wait for a card to be mailed.

The buyer can turn around and spend this code on a retailer’s website, and some retailers accept them from some gift card marketplaces as payment in stores.

It’s those limitations that are important for Steve’s story, since a gift card marketplace site sold him a gift card code that the retailer isn’t willing to accept.

Pay even less

Steve bought a gift card code worth $31 from ABC Gift Cards, a site that he says that he normally trusts. He brought this code over to a physical Payless store, but they wouldn’t accept it, since the chain’s policy is that it only accepts virtual gift cards from the sites Raise and Gift Card Mall, and customers have to meet strict requirements.

He was told that he would have to print out the virtual gift card and hand this copy over to the store, and the store would write down his driver’s license number and keep it with the printout.

Steve thought that this sounded excessive, and speculated that Payless was trying to weasel out of accepting pre-bankruptcy gift cards.

“This bulls–t policy makes a lot of sense since Payless is bankrupt and every gift card they refuse to honor is more money they get to keep,” he emailed to Consumerist.

Unlike some retailers, Payless accepted gift cards all through its Chapter 11 bankruptcy, and at store liquidation sales. Now that it has emerged from bankruptcy, the company plans to accept its old gift cards indefinitely. Steve’s hypothesis would be true in some retail bankruptcies, but not this one.

We checked with Payless about using gift card codes purchased from third-party sites. A company spokeswoman confirmed that yes, it only accepts cards from Raise and from Gift Card Mall, and yes, it requires a printout of the virtual gift card.

The code wasn’t useless after all

We learned that Steve could have used the code on the Payless website as long as the seller provided the PIN used for online purchases. However, that wouldn’t have been helpful if he needed the shoes right then and couldn’t wait for them to be shipped, or if he were shopping a liquidation sale at a local store.

The transaction worked out okay for Steve. He received a refund from ABC Gift Cards when he reported that he had trouble spending the gift card. He most likely could have used the code online with no problems, but he didn’t know that at the time.

Consumerist checked with ABC Gift Cards to ask about how it markets cards for retailers that don’t accept them, but haven’t yet received a response. We will update this post if we do.

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