A neat gift card trick: Site tracks balances
Mark Edward Roberts received a wallet four Christmases ago that left him feeling less than jolly. The slim leather wallet was about half the size of his old one, which was already overstuffed with credit, reward and gift cards.
“I couldn’t fit anywhere near all of the stuff I wanted to carry with me,” Roberts said. So he removed many of the gift cards and, before long, lost most of them.
Frustrated, Roberts and his friend Jennifer Mathe, who gave him the wallet, brainstormed ways to help people better manage their gift cards, which experts estimate will be the most popular item of the holiday season, totaling more than $26 billion in sales.
The two came up with the idea to enable users to purchase and register their gift cards, track their balances, swap cards of equal value and even earn interest. About 100 retailers, including Barnes & Noble Inc., Kohl’s Corp., Linens ‘n Things Inc. and AMR Corp.’s American Airlines, have signed on with Leverage Inc.
The service is free to consumers. Registration and gift card purchases will be available on the site today; the remainder of its services will launch Monday.
“The whole idea is to give you a one-stop shop,” Mathe said. “As a consumer, you shouldn’t have to go anywhere else.”
The Irvine company hopes its online service, at www.leveragecard.com, will alleviate some of the frustrations associated with gift cards. This year, about $8 billion in gift cards will go unredeemed, according to Consumer Reports, which also found that 27% of gift card recipients have at least one unused card from last year.
“These aren’t the foolproof gifts that you think, because so many people don’t redeem them,” said Kim Kleman, editor of Consumer Reports. “They can just become a big pain.”
Gift cards have gained popularity in recent years. Gift card spending during the holiday season increased to $24.8 billion last year from $17.3 billion in 2004, the National Retail Federation says. The number of gift cards purchased during that time also rose, to 3.73 cards per shopper from 3.38, as well as the average amount spent per gift card, to $39.16 from $32.08.
Gift cards are often an attractive option because they allow recipients to choose what to buy and are more personal than giving cash. But there are downsides as well. In addition to lost, expired or unused cards, some decrease in value over time or are subject to fees.
In California and several other states, cards for specific retailers aren’t allowed to expire or lose value. Bank-issued cards, which aren’t limited to a particular merchant, usually carry more restrictions than retailer-issued ones.
“They’re not an especially good deal,” Kleman said. “If you’re afraid of giving an actual gift, we’re telling people to write a check.”
At the Grove shopping center Wednesday, shoppers listed gift cards among their favorite presents to receive, but many acknowledged having a difficult time keeping track of their whereabouts and balances. Some had found creative ways to keep their gift cards in one place.
“I used to lose them like crazy,” said Andrea McCoy, a corporate flight attendant from Los Angeles. “Now I keep them all in a Ziploc bag. It’s not very sophisticated but it works.”
Julie Foster, a Long Beach accountant, was so notorious among her friends for misplacing gift cards that one pal gave her a business card case for her recent birthday. “When you lose several of them,” she said, showing off the new leather case filled with 11 gift cards, “it adds up.”
By registering a card at Leverage, users can track their gift cards online and are notified when gift card balances change. If a card is misplaced, a backup mechanism can retrieve lost card numbers.
For those who buy gift cards on the site, there’s a small financial reward: 3.65% in interest. Cards that are registered with but not purchased from the website earn 1% interest.
“People might not be making $100 a year from this,” Mathe said, “but it’s definitely better than having dead plastic sitting in your wallet.”
Loyalty programs such as frequent-flier miles and reward cards can also be registered on the site. Although there aren’t bonuses for registering the information, Leverage executives said they believed that consumers would benefit from being able to view all of their account balances in one place.
For retailers, the site provides another venue to sell gift cards and advertise. Retailers also can direct ads and special offers at those most likely to buy their products, based on factors including user profiles and the gift cards a person registers or buys.
But Leverage’s backers say they won’t compromise users’ privacy. Retailers won’t be able to contact users directly or get access to their personal information.
Partner retailers said they were attracted by the company’s innovative approach to connecting businesses and shoppers.
“We were on board almost immediately,” said Jon Katzen, manager of business and incentive sales at RedEnvelope Inc., a San Francisco-based online gift retailer. “It’s a new way to communicate and advertise to consumers. . . . That’s really what sold me on the whole concept.”
Danielle La Fors, corporate sales manager at Wine.com, said the website “felt like something that hadn’t quite been done before. Leverage itself really is filling a void.”
Leverage’s launch wraps up 2 1/2 years of development. Roberts, an engineer and former technical sales representative, and Mathe, an attorney, quit steady jobs to form the company. With a tight budget and limited resources, the friends sent informational folders -- after applying Leverage logo stickers to them with a rolling pin -- to marketing executives and met with private investors.
The company and its staff of 12 -- most are younger than 35 -- recently moved into a small office space, spending less than $5,000 on furniture that was purchased at a bankruptcy sale.
“It’s taken a long time for the pieces to come together,” Mathe said. But “there’s not a moment of regret.”
Roberts and Mathe say the last few years have been worth it because they believe they’ve developed a site that will reconcile a person’s love of gift cards with the frustrations that often accompany them.
“No matter how you slice it, it is the No. 1 gift,” Roberts said. “We’re just doing what we can to eliminate a lot of those drawbacks.”
