On the forums of consumer advocate, Christopher Elliott, another customer, Louis Morgan, has been victimized by Amazon, to the tune of $400:
My take on it: Amazon is brazen. As the U.S. federal government and Florida state government are scaling back their civil asset forfeiture programs due to overwhelming negative publicity, Amazon continues the similar practice of stealing gift card balances, despite having no legal ground to stand on.
Below, is my reply to Morgan’s case, and a reasoned argument that Amazon gift cards should be completely avoided.
The replies Morgan received from Amazon reveal more of Amazon’s hubris, particularly this statement:
Regarding your gift card funds —
We closed your account because you reported an unusual number of problems with your orders. As a result, your unused gift card balance is no longer available.
Let that sink in. Imagine if a bank closed your account and said your bank account balance was no longer available because you were a problem customer. What we are looking at is a different situation, yet it shares similarities. Gift cards have more legal protections than airline miles, which typically have none. Yet, Amazon feels confident in flouting the law and enhancing their bottom line through theft of gift card balances and Amazon Seller account balances.
The recurring theme among Elliott commentators is that we cannot judge Amazon having heard only the customer’s side of the story. Surely, Amazon’s actions are legitimate and Morgan is omitting nefarious activity. However, Amazon is the judge, jury, and executioner. They hold the cards and when they ban you, they cut access to your account history and information while retaining it for themselves. Further, Amazon often declines to articulate its position even to the injured party.
When we read Amazon or Yelp reviews, do we care about the position of the manufacturer, distributor, or business owner? No—typically we look for a concordance of evidence from multiple reviewers (while perhaps using tools like www.fakespot.com). The evidence that Amazon is systematically stealing gift card balances, and that this practice has been going on since 2008, is approaching consilience.
How many stories go untold from customers who were actually doing shady things such as trading Amazon gift cards for BitCoin? As a government practice, the tide is turning against civil asset forfeiture—the U.S. federal government has suspended its equitable-sharing program and in Florida, effective 7/01/2016, Brandes’ bill (SB 1534) takes effect, massively reforming Florida’s civil asset forfeiture practices.
What Amazon does is reminiscent of civil asset forfeiture. In theory, one could apply one bad gift card to their account—perhaps received as a birthday gift or from a web donation—and end up forfeiting their entire gift card balance. Amazon encourages maintaining large gift card balances through offers such as their current “Buy $100, get $5” offer, obviously because resting gift card balances help maximize their free cash flow. Thus, they may be complicit.
Essentially, the takeaway for Elliott.org commentators and others is that the counterparty risk for resting Amazon gift card balances is alarmingly high. Since Amazon gift cards are typically acquired at close to 100% of face value, their counterparty risk needs to be very close to zero for them to be a good medium of exchange in countries with reliable banking systems such as the United States. Since banks typically pay no interest, it would be unwise to keep your money in a bank that had even 0.01% risk of balance forfeiture. Americans do not typically have to worry about bank defaults thanks to FDIC insurance. There is no similar insurance for your Amazon gift card funds. Therefore, Amazon gift cards should be avoided by gift-givers and for online trades. Recipients of Amazon gift cards should warn the sender about Amazon and should redeem their gift cards quickly to reduce risk of forfeiture.