ot: barnes and Noble Loophole.

[scaredyclassic]

so I was in line with my kids at barnes and noble buying the new diary of a wimpy kid and other stuff when i was presented with a deal — buy $75 in gift cards, get free $10 gift card (but $10 card only valid after 12/26). great I say. I’ll do that deal. In fact, I buy $225 in gift cards. heck we eat that much in chai tea and cookies in the cafe there probably per quarter. plus I want barnes and noble to thrive so I feel good about lending them $225.00.

then the sales lady says we can pay for the new gift card with an old gift card i have in my hand.

And my oldest kid immediately spots the angle.

Continuously trade in purchased gift cards for new gift cards, make $10 for every $75 exchanged.

fine print says limit is $1000 in gift card exchanges per day. Still that’s $133 or thereabouts…

I was pleased that my kid saw the possibility in the deal. We did it once and cleared an extra $30.00 while putting no new money into the transaction.

Why in the heck would this company allow people to buy new gift cards with old gift cards when there is financial benefit to doing so?

[Coronita]

Heh heh.. .Your son’s a sharp one there….

but careful… Maybe Barnes and Noble has this deal because because when/if Barnes and Noble ends up like Borders Bookstore, your gift card becomes a very expensive piece of plastic.

[sjk]

[quote=squat250]so I was in line with my kids at barnes and noble buying the new diary of a wimpy kid and other stuff when i was presented with a deal — buy $75 in gift cards, get free $10 gift card (but $10 card only valid after 12/26). great I say. I’ll do that deal. In fact, I buy $225 in gift cards. heck we eat that much in chai tea and cookies in the cafe there probably per quarter. plus I want barnes and noble to thrive so I feel good about lending them $225.00.

then the sales lady says we can pay for the new gift card with an old gift card i have in my hand.

And my oldest kid immediately spots the angle.

Continuously trade in purchased gift cards for new gift cards, make $10 for every $75 exchanged.

fine print says limit is $1000 in gift card exchanges per day. Still that’s $133 or thereabouts…

I was pleased that my kid saw the possibility in the deal. We did it once and cleared an extra $30.00 while putting no new money into the transaction.

Why in the heck would this company allow people to buy new gift cards with old gift cards when there is financial benefit to doing so?[/quote]

Thanks for the short tip…..LOL

[scaredyclassic]

true. it could be a large scam. I got caught with $75 of pants i intended to return to j peterman when they declared bankruptcy about 12 years ago. they wouldnt take them back even when they came back in reorganized fashion. as long as we spend the money quickly though, it might be worth the risk.

but probably not a good plan for meeting all of your literary needs in retirement.

this scheme is technically limited by $1000 limit ofn gift card exchanges, but in reality, it’s limited only by your sense of shame in returning tot he cash register and your motivation to drive to other barnes and nobles when/if they cut you off…

[Hobie]

On paper it looks like a new sale. Overinflates sales numbers. Is B&N looking for a buyer? Besides lots of people never redeem gift cards and they have the cash. All said, I bet they limit that deal very soon. Smart kid. Proud Dad.

[Coronita]

Mish has something to say..

http://globaleconomicanalysis.blogspot.com/2012/01/barnes-noble-in-trouble-whats-next.html

[scaredyclassic]

I’m going to stop by there on my rounds occasionally till the deal expires.

theoretically, I could get everyone in my family $1000 in transactions, earn $133 a day x 5 = 665, 3k a week, just stopping by there at night. i’d have a bunch of money invested in barnes and noble gift cards…

do the companies have to pay out gift cards in bankruptcy? how does that work?

[scaredyclassic]

Article
Comments (20)
BANKRUPTCY BEAT HOME PAGE »
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By Jacqueline Palank

A bankruptcy judge said Borders doesn’t owe anything to the gift-card holders who didn’t use their cards before the retailer closed for good and who failed to file claims for the card balances by last year’s deadline.

Judge Martin Glenn of the U.S. Bankruptcy Court in Manhattan on Tuesday ruled against Borders gift-card holders who argued they were entitled to file their claims past the deadline because the retailer “did nothing” to reach out to them and “thousands” of other gift-card holders before it shut down last September. Borders opposed the request, arguing that the customers had plenty of time to use their cards or file a claim.

The judge said Borders wasn’t required to individually notify each and every gift-card holder that they were running out of time to use their cards, nor could it if it wanted to.

“Gift cards, as their name illustrates, are not intended to be used by the purchaser but are instead intended as gifts, so even if the debtors were able to identify the purchasers of the gift cards, they would have no way of tracing the ultimate recipients,” he wrote in his opinion. “And, in fact, the gift card holders, by their own admission, received their gift cards as gifts. Therefore, the debtors had no way of tracing their identities.”

Clint Krislov of Krislov & Associates in Chicago, who is representing the gift-card holders, expressed disappointment with the judge’s ruling, which he expects to appeal.

“We will pursue this further,” he told Bankruptcy Beat Wednesday.

As we reported earlier this year, gift-card holders said they tried to redeem their plastic for purchases last holiday season but, “much to their surprise,” found that the cards were no longer valid. Judge Glenn didn’t buy it; after all, Borders’ liquidation lasted months (and was in the news for months) before the last book was sold.

“The gift card holders had the opportunity to at least use their gift cards and mitigate their losses, and merely chose not to do so,” he wrote. “The claimants have provided no other credible reason for their lengthy delay in filing.”

Mr. Krislov said the delay shouldn’t be held against “ordinary consumers” whom he said Borders had the ability, through several databases filled with customer emails, to reach.

He added that it would have cost Borders no more than $25,000 to send out a blanket email notifying those customers of the claims deadline, which he said was a small price to pay on the chance that gift-card holders would be among those customers.

“We think that due process requires a reasonable effort to notify claimants whose existence was known and could have been notified,” he said.

The judge, however, ruled that the gift-card holders didn’t prove that those databases positively identified customers as gift-card holders, which he said didn’t trigger the requirement that Borders contact them.

Judge Glenn added that allowing the gift card holders to file late claims “would have a disastrous effect” on Borders’ effort to pay its creditors from the fruits of its liquidation. After all, Borders’s records indicated 17.7 million outstanding gift cards with unredeemed balances of some $210 million as of June 2011. The judge said adding these claims to the list would hurt the general unsecured creditors whose claims would rank below the gift-card claims; unsecured creditors are already slated to recover between 4% and 10% of what they’re owed.

[scaredyclassic]

this does sound like a lot of work with some risk, but frankly, we spend far more money at barnes and noble every year than any other retailer, with exception of gas and groceries.

[Coronita]

[quote=squat250]I’m going to stop by there on my rounds occasionally till the deal expires.

theoretically, I could get everyone in my family $1000 in transactions, earn $133 a day x 5 = 665, 3k a week, just stopping by there at night. i’d have a bunch of money invested in barnes and noble gift cards…

do the companies have to pay out gift cards in bankruptcy? how does that work?[/quote]

Generally no… At least that’s what happened to my Borders gift card I won at a charity…

[SK in CV]

[quote=Hobie]On paper it looks like a new sale. Overinflates sales numbers. Is B&N looking for a buyer? Besides lots of people never redeem gift cards and they have the cash. All said, I bet they limit that deal very soon. Smart kid. Proud Dad.[/quote]

Doesn’t quite work this way. Sales aren’t reported until the cards are redemmed. Trading in one gift card for another doesn’t affect sales volumne. But absolutely correct about cards that are never redeemed. Same thing with cashiers checks and travelers checks, that’s one of the ways Amex makes so much money, they keep the cash (and earn a return on it) while the travelers checks sit in someone’s dresser. The liability remains on their balance sheet, but they get the cash.

[bearishgurl]

[quote=squat250]…Judge Glenn added that allowing the gift card holders to file late claims “would have a disastrous effect” on Borders’ effort to pay its creditors from the fruits of its liquidation. After all, Borders’s records indicated 17.7 million outstanding gift cards with unredeemed balances of some $210 million as of June 2011. The judge said adding these claims to the list would hurt the general unsecured creditors whose claims would rank below the gift-card claims; unsecured creditors are already slated to recover between 4% and 10% of what they’re owed.[/quote]

scaredy, you answered your own question. In the case of BK and assuming arguendo you timely FILED a creditor’s claim for the value of your unused BN gift cards, it is VERY likely you would recover little to nothing when all was said and done.

After reading Mish’s take on this, my advice is to not buy anymore and have lots of hot toddys with your family and guests there over the holiday season. IF BN decides to file for BK protection, it will be AFTER the new year, when their holiday proceeds are tallied.

[scaredyclassic]

i figure i’ll get a little warning before they shut down.

i stopped by again to do my dastardly plan. problem; i got waylaid and started grabbing a bunch of books. next thing i knew I was at the checkout losing money on the whole transaction.

i love to buy all kinds of books.

like to leave them scattered around the house to entice children to peruse.

this deal is not going to work out. I will go in, buy gift cards, buy even more moneys worth of books today, get all caffeinated up, buy a nook and they’ll be bankrupt in january.

[bearishgurl]

[quote=squat250]i figure i’ll get a little warning before they shut down.

i stopped by again to do my dastardly plan. problem; i got waylaid and started grabbing a bunch of books. next thing i knew I was at the checkout losing money on the whole transaction.

i love to buy all kinds of books.

like to leave them scattered around the house to entice children to peruse.

this deal is not going to work out. I will go in, buy gift cards, buy even more moneys worth of books today, get all caffeinated up, buy a nook and they’ll be bankrupt in january.[/quote]

LOL, scaredy, I’m sure you’ll be able to spend all your GC $ by then.

I like your idea about leaving books lying around for children to pick up and peruse 🙂

I’m guessing your kids don’t have iphones. If they did, they probably wouldn’t touch a book unless a grade depended on it :=0

[Diego Mamani]

[quote=squat250]i love to buy all kinds of books.[/quote] Me too, but I usually buy used from amazon.com ($0.01 + $3.99 S&H), or abe.com, etc.

[Author]

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