The gift card resale site GiftcardRescue.com has closed its doors, saying that its lenders have frozen its accounts.
Citing a lack of financing, gift card exchange GiftCardRescue.com has closed up shop. Kwame Kuadey, founder and CEO, launched the company in 2008, enabling consumers to exchange unwanted gift cards or buy new ones at a discount. In a letter to customers on the company’s Website, Kuadey said one of the company’s lenders froze its bank account without warning, forcing the businesses to be shuttered earlier this month. The lender won a loan default judgment, according to a report in The Baltimore Sun.
The company was featured on the television show “Shark Tank” and was founded as part of a business school project. The founder said that the company’s growth outpaced its financing in an interview with the Baltimore Sun.
The secondary gift card market has been one that has both benefits and perils for retailers. While it can help get unwanted cards into the hands of motivated shoppers at no cost to the issuer, it also can be a vector for fraud. The closure of Giftcardrescue.com is not an indictment of the secondary gift card market, but rather it is apparently a lesson in the importance of being able to manage growth and financing in start-ups.
Overview by Ben Jackson, Director, Prepaid Advisory Service at Mercator Advisory Group
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