In the past, I’ve toyed with ideas to avoid the expiration date on gift cards and, of course, the potential business concepts to capitalize on those ideas. While the gift card business is a tough one, it’s growing hyper-fast and has a tremendous pool of dollars associated with it. With annual expenditures on gift cards exceeding $40bb, its ripe for some kind of market or exchange where trading and selling can occur.

A whole host of niche exchanges have started and while some may say they’ve seen moderate success, I’d say they haven’t seen great success. These include CardAvenue and Plastic Jungle. Ebay remains the king in this category (as it does in most), and for some reason continues to dominate the competition.

So my thoughts always ran along the following lines: The interesting thing is that a $25 gift card is not really worth $25 to the card owner if it’s going to languish in his bottom drawer. An arbitrage opportunity is born because of the mispricing of this asset. You would think that there is a market opportunity to go ahead and buy a card at a discounted price and then flip it to someone who is more motivated to actually use the card.

Great arbitrage!

The issue with this line of thinking is that once the person is willing to sell you his card, he becomes a motivated seller and can go to any of the above exchanges and/or use the card himself.

Another lost arbitrage opportunity?

Not if it has expired. My Money Blog has a great thought on the process of avoiding expiration. While I’m not sure how legal it is, it seems that there are laws prohibiting expiration in seven states (California, Connecticut, Louisiana, Massachusetts, New Hampshire, Rhode Island, and Washington). Ship your card to an individual in any of these states and they can claim a new one.

Now, that’s an arbitrage!… and one that I expect CardAvenue and Plastic Jungle are going to look to take advantage of.

… and soon!