So the other day, Web Watch was flipping through one of our myriad of magazine subscriptions when one of those annoying response card things fell into our lap.
But before we could toss it away as we do all the others, we noticed there was something different about it. This one had gift card attached to it.
A $500 gift card.
“Whoa,” we said. What did we do to deserve this, other than subscribe to a magazine or two?
The card says that it’s a $500 GIFT CARD, “redeemable for merchandise at RedStarWorldwear.com.”
The flyer it was attached to said this on the front: “Please accept this prepaid $500 Five Hundred Dollar Gift Card as THANKS IN ADVANCE for helping us spread the word about RedStar Worldwear! (this card is prepaid so don’t lose it – use it! Great stuff, going quick!)”
The back of the flyer was a bit more helpful:
“WHY? We want to create a buzz for our new products (not yet available in stores), so for a limited time we’re giving away gift cards to select active lifestyle consumers. We want people to see these brand new cool RedStar products on the street as fast as possible!”
“This gift card is prepaid (so don’t lose it)! THANKS FOR HELPING US SPREAD THE WORD!”
“For questions regarding this gift card, call us at [a 521 area code phone number] or visit us online.”
“There is a 9% service fee to pay for delivery and handling expenses provided by our mailing services company. The fee includes 1st class postage, general overhead and profit, free exchange program, and processing and handling services.”
The back of the card repeats much of the above, with the following additions:
“It is redeemable for $500 of RedStar Worldwear merchandise at the proposed retail selling prices online. This card is not redeemable for cash, and will not be replaced if lost or stolen. Over 200 cool RedStar products for men and women to choose from.”
The fun part of all this is that when you remove the gift card from the flyer, there’s a QR code and the message, “GIFT CARD MISSING? Just scan this code with your smartphone and get a virtual $500 gift card, absolutely free!”
So what is RedStar Worldwear and why are they sending out $500 gift cards everywhere?
Because that 9% shipping and handling fee — which they nicely point out is part of their “general overhead and profit” can add up pretty quickly. Assuming that you spend all $500 on an item on their website, that “free $500 GIFT CARD” just cost you $45.
Yeah, it smells a little fishy to us, and apparently it smells a little fishy to a lot of people out there:
- Free sunglasses: a business model I don’t understand
- Not really free sunglasses
- Is a free prepaid $500 giftcard from RedStarWorldwear a scam?
- The Red Star World Wear Scam
- If it’s not a scam, how does Red Star make money?
In the end, RedStar is a legitimate business. Yes, they do sell merchandise at what appears to be ridiculously high markup prices, but they are completely upfront about what the S&H is on every product they sell. If it were a scam they wouldn’t tell you about that 9% upfront at all. It’s certainly more honest than the generic “just pay a shipping and handling fee” statement on those late-night infomercials.
Could you do better by going to your local mall kiosk? Well, maybe you could.
Ask yourself this question — given the proliferation of these giftcards around in various event gift bags and magazines, do you know anyone who has ever purchased any of these products? That’s your real test — recommendations directly from your friends.
Sometimes, that’s the only way to find out if something is truly awesome and better than expected, or still something unknown that you don’t know you want to try until the opportunity has passed.