In the world of gift cards, Amazon is the king of breakage. Amazon has a bad reputation of voiding perfectly legitimate gift cards owned by users with perfectly good intentions more frequently than any other retailer. They pocket 100% of the money paid for the gift card without actually providing any goods or services. Formal SEC filings show Amazon has over $2.3 billion in gift card liabilities and enjoy breakage rates as high as 7-8% for their cards. Each year, millions of dollars in gift cards are left at the bottom of birthday cards, pant pockets, gift boxes and Christmas stockings and are never spent by customers. And millions more are stolen directly from customer accounts by Amazon each year.
Unlike other retail brands like Walmart, Best Buy or Nordstrom, Amazon requires all gift cards to be redeemed to a single account. After redeemed, the gift card is unusable by any other party. However, if Amazon’s bots detect any behavior on the account that they believe is in violation of their Terms of Service, the account will be permanently suspended and 100% of the gift card balance will be forfeited back to Amazon. Even if the gift cards are purchased with cash, Amazon still has a strict policy of stealing the entirety of the gift card balance.
For this reason, most Amazon gift cards (even with a cash receipt) have an actual value of $0.70 or lower the secondary market. The assumption that an Amazon gift card is “as good as cash” couldn’t be further from the truth. In fact, buying an Amazon gift card in the first place is like taking $100 in cash and converting it to about $70 in cash. It’s not a great deal for customers. This discount reflects the likelihood that Amazon will actually allow a customer to convert their credits to a usable product or service (~70% success rate).
This article explains some of the (many) reasons Amazon shuts down individual buyer accounts — leading to breakage and free revenue for Amazon. This data is accumulated by testing hundreds of Amazon accounts with various types of gift cards purchased on Redeeem, Paxful and other peer-to-peer exchanges.
1. Multiple Shipping Addresses
Many dropshippers will list products on a website (like Shopify or eBay) and after the item has been purchased, the owner will buy the product on Amazon and ship it to the customer. This way they carry no inventory, which reduces financial risk. This can be done successfully, however shipping to multiple locations in multiple states from a single Amazon account is a red flag to their bots that the account is being used for commercial purposes. If you are not listed as an Amazon Seller, they may suspend your account. It’s recommended to ship to one or two local addresses only if you are using an individual account and buying higher volume.
2. Missing Billing Address
I recommend always adding a billing address on file for every account. Even if you are using gift cards, add a real/fake credit card with a real billing address that ideally matches the IP of the computer you use most frequently and ideally the billing address also matches the shipping address.
3. Too Many Digital Options
While it’s easy to convert Amazon gift credits to other gift cards like Best Buy, Uber, Safeway, Fandango or Lowe’s, Amazon for obvious reasons doesn’t like you converting credits to other competing merchants. The main reason is they don’t make very high margin on these products. A general rule of thumb is make sure over 50% of your purchases are physical goods (not gift cards or other e-products).
4. Fraudulent Gift Cards
This is a tricky one. Gift cards purchased with cash have 99% lower fraud rate simply due to the avoided risk of being associated with a stolen credit card. Gift cards purchased with debit or credit cards are easier to cancel or get refunded than cash or money orders. In all cases, make sure you have a receipt for the gift card or the gift card supplier has a trusted reputation.
5. Obvious Bulk Buying
One easy way to get your Amazon account shut down is to only buy excessive amounts of the same product with the same SKU without a Business account. This does not mimic normal use by a customer, so its easy to accuse these accounts of commercial trade activity. If you are buying Gucci bags on Amazon, make sure you buy a few different SKUs and space out your purchases.
6. Too High Credit Balance
Another way to get your account shut down is to keep high credit balances in your account. Having over $1,000 in gift card credits for a long periods of time without spending them is a red flag to Amazon that you are stashing gift cards. This has not been heavily tested by our team, but we always recommend keeping balances under $1,000 just to be safe. Having credits on Amazon is like winning a bet with your drunk uncle. These are non-guaranteed assets.
7. Multiple Taken Cards
If you attempt to redeem too many gift cards that have been redeemed to other Amazon accounts, it’s obvious that you are buying gift cards on secondary markets. Especially if the attempted gift cards have been locked or flagged for fraud, this increases the risk score of your account if you are associated with these cards. Always buy from friends or trusted sources!
8. Using Shared VPNs
If you are accessing a US-based Amazon account from out of the country, make sure you utilize a private VPN to show Amazon you are located in USA. With a shared VPN, you're sharing your IP address with other people, sometimes over 100 different computers. With a dedicated or private VPN, your IP address is unique to you and is a lot more secure.