Is Amazon's offer of a $50 gift card a scam?
These kinds of credit card offers are incredibly common. More often you will get a certain reward if you spend $X within Y days of getting the card. In many cases you can take advantage of them with very little downside. However, are you responsible enough to have a credit card and be able to pay off the balance every month? If not the interest charges could quickly wipe out the $50 bonus you get. And hard inquiries and new accounts could potentially affect your credit score, particularly if you don't have a well-established credit history. There's also the chance you get denied in which case you add a hard inquiry to your credit report for no gain. "What's going on here is that Amazon/visa thinks that the money they will earn on average from irresponsible credit card users is more value than 50$ each. This is the same logic that is behind the cash back or airplane point bonuses many credit cards offer, or the ""apply and get a free 2-liter of soda"" that some stores offer. I would need more information about the card to say whether or not you should apply (What are the fees, if any? What is the interest rate? etc)." "The most likely reason for this card is that Amazon has an arrangement with the issuer (I believe that that used to be Chase; may have changed since).  Such an arrangement may allow Amazon to take the risk of chargebacks, etc. in return for the issuer handling the mechanics of billing.  This is advantageous for Amazon, as otherwise they are subject to both their own procedures and those of the issuer.  Amazon would rather take the entire risk than share it with someone else who charges for the privilege.   Fees for processing credit cards can be as much as 5%, although 1-2% is more typical.  Due to its size, Amazon may already have negotiated fees lower than 1%.  But even so, any savings they make are to their benefit.  Further, now they can get a share of the fees charged to other merchants.  For example, if you buy a book from Barnes & Noble (an Amazon competitor) with the Amazon card, then Amazon gets some money in return, say 1% of the transaction.   If the price is the same on Amazon and at Barnes & Noble, you can actually save money with the Amazon card.  Amazon gives more ""cash back"" in the form of gift card balance for an Amazon purchase.  So the card may mean that you buy from Amazon when you might otherwise have chosen someone else.  If we again assume a 20% margin, they only need $200 of additional purchases to make $40 of profit.  Someone who buys $1000 additional on the Amazon site makes them $200 of profit.  They're over $160 ahead.   Also note that Amazon is only giving you a gift card, which you have to use on Amazon.  And it's difficult to spend exactly $50.  As a practical matter, most people will buy, say, $60, with $10 of that money.  So they sell you $48 of merchandise (their cost, assuming a 20% margin) for $10.  They lost $38 on that transaction, but they've lured you into a long term relationship that may return more than that.  And they didn't lose the $50 you gained.  They only lost $38.   Think about it as a marketing cost.  Amazon is willing to pay $38 for a long term relationship with you.  From their perspective, doing so in such a way that you come out $50 ahead (assuming you would have made the same purchases without this), is a win-win.  Because once they have that relationship, they can leverage it to give them savings elsewhere.   This is Amazon's approach in general.  Originally all their products were drop shipped (from someone like Ingram Micro).  They handled the web site and billing while the drop shipper handled inventory and shipping.  Then Amazon added their own warehouses.  Now they can do all that separately.   This is just the same thing for buyers.  Amazon manages all the risk of the transaction and thus gets all the profit.  Because Amazon is managing the credit card risk, they have access to all the credit history.  This helps them better determine if that sudden shipment of a $2000 camera to Thailand is a real transaction (you're a photographer who regularly vacations in Thailand) or a fake (you've never been to Thailand in your life and your phone is camera enough).  That additional information may itself be worth enough to make the relationship profitable for Amazon.   Amazon certainly gets something out of the relationship.  You give them money.  And you are likely to give them more money with the Amazon card than they would otherwise receive.  But you get products in return.  Is that a good deal?  If you prefer having the products to the money, then yes.   Others have suggested that it's the irresponsible credit card users that generate the real profit.  I disagree.  They generate more revenue in the short term, but then they overspend and declare bankruptcy.  Then Amazon loses its money.  Yes, they get more interest and fees in that case, but if they lose $1000, they needed to make $1000 in profit just to break even.  It's safer to make the smaller short term profits with responsible customers who will continue to be customers for the long term.   A steady profit of $100 or $200 a year is better than a one time profit of $500 followed by a loss of $1000 followed by nothing for ten years.   Anyway, your question was if you should sign up for the card.  If you are planning on doing a lot of shopping on Amazon, you might as well.  It gives you cash back.  If shopping on Amazon is inconvenient, then perhaps that outweighs the advantage of the card.  The ""cash back"" is just Amazon money.  You can't spend it anywhere but Amazon.  If each transaction gives you a little bit of Amazon money, you have to keep going back to spend it." "Every financial services company (and cellphone provider, cable and broadband provider, private energy supplier, and so on and so forth - it's turtles all the way down in a market economy) spends ""something"" to acquire a new customer.  Paying attractive college students minimum wage to hand out brochures and branded fidget toys costs money.  A 1 million piece postal mailing for a 1% response rate costs money.  A TV ad or billboard costs money.  A signup enticement of cash or airplane miles costs money.   The question is, what does an organization spend per new customer?  The amount a company wants to spend has to do with their medium term outlook and overall margins, so it will vary with the business cycle, but a rule of thumb is $100-200 spent for each customer who signs up.  The advantage to this particular offer is that it may involve some payments to Amazon, but it includes less labor or cost-per-wasted-contact than alternatives.  So there's more in the budget to entice the prospect.   Recall, it's a one-time cost, and you gain a relationship where you get 2% of credit processing turnover for the duration of the account; a chance at 19.99% APR financing or other fees; and an opportunity to upsell a mortgage or life insurance or IRA accounts, etc to a known customer." The 'store card' that Amazon offers gives 5% back on Amazon purchases. Some time ago, when I realized how much of my spending was going through Amazon, I chose that card over this one.  If you want the card, that's fine, but if you are going to play the reward game, there are far higher bonuses available for card signups. No, it's not a scam. Many stores will offer a discount at the register the day you sign up for there card. In general, the store cards should also give a discount when used at that store, or airline for that matter. Amazon has 2 different cards you can apply for, a store card and a credit card. The credit card is through Chase. The deal is not a scam, I can confirm this because I applied for their credit card and got $70 in the form of a digital gift card. By giving customers free money for signing up for their cards they get more people who are willing to give it a try. Once you have a card, you get benefits like 3-5 percent back on Amazon purchases that will entice consumers to use the card. Amazon likely has an agreement with Chase and they are hoping to get you hooked with the free money and benefits. "No. Amazon is a reputable company. Many stores have their own credit card. Additionally they have several cards available, through Visa and Discover. Neither would allow their name to be used knowing that a company was using it to scam people. And credit card companies are used to going after people with the full force of the law on their side. It's the only way they stay in business. I would read the terms and conditions, but as is, it is not a scam. But a free $50 seems to good to be true. Nothing is free. Having their credit card is significant. Look into the ownership of a credit card and how credit card companies make money. And ""gift cards for credit cards"" are common. In fact, some companies give away money just to fill out an application even if you turn down the card." "It's not a scam. They just want you to be an Amazon customer for many years and you'll be advertising Amazon to anyone who sees your credit card. $50 is known as the cost of ""customer acquisition"" and it is a very good deal for someone who may become a Prime member and spend $1000s a year on Amazon." a free $50 looks too good to be true. As others already pointed out, these offers are common to many cards that want you to build loyalty towards a particular company (e.g. airlines cards give lots of mileage for a decent initial spend). Should I get this card for the $50? Why and/or why not? How much do you spend on Amazon, or are planning to do so in future? This offer has been around for ages (earlier they used to offer much smaller amounts of $20 for signing up) and you never saw it. So probably, you won't be really using the site frequently. In that case, its just a matter of whether $50 is worth the hassle for you to sign up and then later cancel (if you don't want to manage another new card). The hit to credit score is likely to be minimal unless you do such offers often. As such, for a person who rarely buys on Amazon I wouldn't advise you to sign up for this card, there are better rewards cards that are not as tied to a particular site (such as Chase Freedom, Discover etc.) If however, you are a regular shopper but just never noticed this prompt earlier; then it is worthwhile to get this - or even consider the Prime version, which you will get or be automatically upgraded to if the account has Prime membership. That gives 5% back instead of 3% on Amazon. it's not a scam. it's not even too good to be true. frankly it's the lowest sign up bonus i've ever seen for a credit card. you would be better off signing up for a flagship card from one of the major banks (e.g. chase sapphire, citi double cash, discover it, amex blue). those cards regularly offer sign up bonuses worth between 400$ and 1000$.  however, you can't get all the cards at once. noteably chase has a fairly firm limit of 5 new cards per 24 month. the other banks have similar, less publicized limits on who they will approve for a new card.  so, by applying for this amazon card you are hurting your chances of getting far more lucrative sign up bonuses. it is however worth noting that those larger bonuses usually come with a minimum spending requirement (e.g. spend 1k$-3k$ in the first 3 months) Based on my personal experience with that particular offer, I can say that it's not really a scam. I signed up for an Amazon Credit Card to get $70 off a purchase, but then never used the card. In fact, I never even called to activate it! After a few months, I then called to cancel it. I did not see a significant hit to my credit. However if you do shop frequently at Amazon it may be in your best interest to use their card, because it has other discounts associated with it.
IANAL, but I'm pretty sure buying something at a store does not enter you in a contract with the store.   Also, Target made up the rule about not allowing gift cards and then chose not to enforce it. According to the article, they chose not to enforce it over and over again. In fact, when the promotion ended, Target renewed it with the same terms! Calling these customers cheaters is baseless. No, that's not a fair argument. Obviously that is theft, and the sales associate isn't authorized to do that. She is allowed to act on Target's behalf to process transactions, however.   Buying a gift card with a gift card is not theft. At the most it's a breach of a contract, but Target has little resource because it was a mutual breach of contract. A judge would laugh in Target's face if it tried to get its money back after its own employees and managers processed the transactions. "There are only two things you can directly do with the money in an Amazon gift card: you can keep the gift card, or you can put the money into your Amazon account.  There aren't any other options.  You can't deposit the value into a bank account or anything like that.  So, as far as safety, those are the only options you need to consider, because there's nothing else you can do. (Okay, there is one other thing you can do: you could sell the card to someone else, or barter it for something you want.  But you can do that with anything.) The ""gift card"" is basicaly just a string of numbers and letters that you put into your Amazon account and it credits you with the appropriate amount of money.  So yes, it can be stolen.  If you haven't redeemed it yet, someone could find the code by hacking your email or looking over your shoulder or whatever.  If they redeem it, you won't be able to do so. As for your edit: If I don't transfer the balance of the Amazon egift card to my Amazon account, can I transfer the balance to other accounts or use the card to buy other gift cards? If you don't transfer it to your account, you can transfer the balance to another account by giving the code to someone else and letting them deposit it in their account.  You still won't be able to buy other gift cards with it, because you can't buy anything with it until it's deposited in an Amazon account, and once it's deposited in an Amazon account, you can't buy gift cards with it because of their policy. If you don't want the restrictions imposed by Amazon, don't buy Amazon gift cards; instead, just use your actual money to buy things.  If you're worried about the cards being stolen, just deposit them into your account right away and you eliminate the risk of them being stolen.  If, as you say, you bought the cards for yourself, there's no reason not to do this; presumably you bought them so you could buy things on Amazon, and you'll have to deposit them into your account eventually anyway to do that, so just put them in right away. I don't know specifically how Walmart cards work, but I assume they're the same.  In general, anything called a ""gift card"" offered by a particular retailer works the same way: you can't do anything with it except buy products at that retailer. The only thing that really makes Amazon different is that the only way to use your card is to add the money to your Amazon account, because the only way to pay for things on Amazon is with an Amazon account.  There's no way to spend just some of the value; you have to deposit it all into your account.  With gift cards for retailers with physical locations, you can usually use the value up piecemeal, by actually going to a store and spending just enough to buy something.  (I assume Walmart works this way, although I don't know if you can use an e-gift card this way there.)" "Did you even read the article?  These were people who went into the store and did this in person.  there are no ""orders"" to cancel.  As for invalidating the cards, again, the article stated that many people took the Target gift cards and used them to buy Amex and Visa gift cards.    tl;dr **RTFA**" Lmfao. You seriously believe one of the biggest companies in the world is making this deal in order to get into a niche area within the grocery store market...    Amazon is competing with Walmart, not Trader Joe's. One of the biggest setbacks with online retail is the cost of heavy items. This will give them the brick and mortar front in order to cut costs and compete effectively across a plethora of items. Your first one is third party sellers not having their security up to date, and them losing money based on that.  Not at all an Amazon issue.  Third party sellers used bad security, got hit the same way anyone else would, news at 11.  The second one, I assume, is the like 80,000 email addresses, not connected to anything.  With, you'll notice, encrypted passwords.   &gt;Oh look FUD.   This is not an argument.  Are you seriously unaware of license plate readers?  I mean, I fucking already sent you a link to it.    &gt;Quick someone tell Target their customer's credit card info isn't accessible.   Someone tell the government leaking your SS#, date of birth, etc, is way worse than that!  And it's for all of us!  At least companies learn via stock price.  It just keeps happening at the govt at a much worse scale.   http://www.darkreading.com/attacks-breaches/the-7-most-significant-government-data-breaches/d/d-id/1327468 Stupid article. People on government assistance typically don't have a great deal of money to begin with, and there aren't exactly many items on Amazon that are at 'dollar store' level prices..and unless one is house-bound level of disabled, you really can't fill a whole grocery list by shopping at Amazon as you could running down to Walmart or Save a Lot. "In general,  if you think something even MIGHT be a scam, the answer is""yes""." In store pickup at Walmart is atrocious. I've tried it. And, you still have to go to Walmart. Amazon draws the yuppie types who not only like saving money, but also don't have the time to deal with going to stores and sure as hell don't want to go to Walmart of all places. Not so much a scam, if you fill the required paperwork and actually take time to mail it in assuming it's done correctly; you will get your money. That being said, having a mail-in rebate program is usually a win-win for the seller. While they may have to pay a small fee to a third party who handles the rebate almost always this influences a potential buyer to choose a specific product over the alternative. The seller knows very well that very few people will actually go through with it. And yes, they do often make the process needlessly complicated and long as a deterrent.  Plus, let's be real, no one likes sending out physical letters anymore. From a marketing standpoint the mail-in rebate is a brilliant idea. However, it's usually more of an annoyance for the consumer. Is the VAT scam still on the go? I was under the impression that amazon have to pay vat according to the country the items are shipped to, not shipped from? It will be a complete fuck up on the part of our politicians if this loophole has not been closed yet. or is this a form of money laundering? May not be, generally the amounts involved in money laundering are much higher. So if there are quite a few such transactions then yes it could be money laundering. It could also be for circumventing taxes, depending on country regulations one may try to do this to get around gift taxes etc. In this specific case it looks more of link harvesting / SEO optimization. Take a low cost item that is often searched and link to other product. if you see the company link on Amazon; Cougar takes you to shoes. So maybe on its own Cougar shoes does not rank high, so link it with similar name brand in different segment and try to boost the link. The media is not reporting this story correctly. The way Amazon will likely monetize this patent is by *preventing* brick and mortar stores from limiting your ability to comparison shop. The reason? Amazon is the primary beneficiary when shoppers check for prices in real time.   Sure, maybe Amazon will also use it to prevent comparison shopping in Whole Foods, but I really doubt that is the primary way Amazon intends to monetize the patent. If you're in Whole Foods, you probably aren't interested in going to Safeway, even though you already know it is cheaper. Ok so Arbitrage?  I was looking specifically at the people who took this deal to the extreme taking the $5k and using the $10 giftcards to buy prepaid credit cards.  Would the better term would be positive-feedback loop, since the only constraint would be time and energy to the people exploit this deal.  Is there a financial term that fits this better? In addition to paypal, Amazon also offers a payment processing service that has micropayment pricing: For Transactions < $10: