If you are selling cards you know, you know, you know full well you will not be honoring, then that sounds quite a bit like theft of some sort. That sucks for everyone involved. I think something similar (but less dramatic) went down with Sharper Image.
Gift cards make some (emotional) consumer sense. They at least let you give someone something along the lines of what they want, and it feels somewhat more personal than just handing someone a wad of cash. It says "I know something about you," instead of "I know nothing about you" or "I didn't want to put effort into this."
It also lets you have some say over what they do with the money. It doesn't always have the nicest undertones, but if someone is a bit reckless with cash you can help out knowing it won't turn into pot. Or on the other side some people work too hard or sacrifices too much, so you give them an order to buy something nice for themselves. It's hard to buy groceries at Best Buy or Macy's.
Beyond that they financially only benefit the store. Available funds can shrink, the customer is forced to either overspend, or underspend to get what they want, and the store wins in both instances. There are no discounts or rewards for using giftcards. It's horrifically unattractive financially for the consumer, and very attractive for the store.
Giftcards are logically stupid, but people aren't robots and have decided they are useful in some way in the weird way we think of things. It would probably be good if people spent a little less on them, or started looking for a little something in return. When was the last time anyone walked up and gave you an interest free loan?
Post edited January 18, 2013 by gooberking