PayPal Digital Gifts iTunes Hacked Cards
I have covered the topic of gift card reselling (arbitrage) quite a lot on this blog. We have a post on the basics, more advanced methods and I have posted a bunch of reselling deals along with analysis over the years. With all of the recent eBay changes, much of the opportunity is now gone, but there are still good deals occasionally.
As with anything in life, you can do everything right and still end up with headaches in the end. For example, I personally only source gift cards that I resell from legitimate companies. Those would be companies that are selling the cards first hand to me as the buyer. I don’t buy second or third-hand cards because the potential for fraud is too high.
Bad PayPal iTunes Cards
Even with buying cards direct, there can still be issues. In July/August it seems that PayPal Digital Gifts was hacked. I had purchased iTunes cards from PPDG through eBay and then immediately sold them to a company I have a bulk relationship with. The profit on these sales was small, but I earned 5X Ultimate Rewards on the purchase and given the ease of flipping them it made sense.
Then, about a week ago I received an email with the subject, “Must Read: PayPal Digital Gifts Breach and What It Means for You” from the company I sold the cards to. It goes something like this:
Hi Shawn Coomer, as you are probably aware, PayPal Digital Gifts experienced a security breach that led to many gift cards being compromised through no fault of your own…
Initially, our investigation determined the breach affected only iTunes cards that were sold in August. However, today it became apparent that the extent of the compromised cards reach as far back as July, though we still have not seen any brands other than iTunes affected.
Later tonight almost all of our sellers will receive “bad card” emails, which will advise you that cards have been compromised and their payout amounts will be reconciled. (Language indicating a replacement fee is not applicable in this instance.)
The good news is that all reports from sellers indicate that PPDG has been responsive and timely in issuing refunds, so there should be no financial loss to any of our sellers, but we recommend requesting the refund as soon as possible.
Also, we fully know that this is not the fault of anyone but PayPal and this is not held against anyone’s selling account whatsoever.
We sincerely apologize for this inconvenience and appreciate your cooperation and understanding in this PayPal fiasco.
And then not long after I received three “bad card” emails for cards bought on July 20, 2016. Through no fault of my own, I was suddenly out $255. I am working with PayPal to get my money back, but this highlights how you need to be prepared to both float money and for things to go wrong.
I have bought and sold enough gift cards and earned enough rewards that the occasional headache like this still makes sense I think, however I really feel that PayPal Digital Gifts is a terrible company considering they still have not contacted me (or anyone else that I know of) to disclose this now evident hack. Either way, you should never overextend and should probably be expecting the occasional issue which can cause delays in getting your money or even trigger a clawback.
Have you gone through the refund process with PayPal Digital Gifts on a hacked card? What has been your experience? Let us know in the comments.