Spa Owner Waits Months for Payment from Online Gift Card Sale

After two successful holiday seasons selling paper gift certificates, Wallingford spa owner Rita Cheng Hogan decided last December to offer gift cards for purchase online.

She said she signed on with Paypal to sell gift cards to her business, the Silk Cotton Spa, through a link on the spa website. Though she continued to sell paper gift certificates in person, just one gift card for $100 was purchased online.

Paypal’s policy is to hold proceeds from sales of gift cards for eighteen months, or until the customer redeems their card for services. Rita said she was delighted when her client finally came in after five months for a massage because she believed she would be able to access the funds.

After trying online and over the phone to complete the redemption process, she said she could not move the money from her Paypal reserve balance to her available balance. Eventually, Rita said a customer service representative told her she would have to wait the full eighteen months from the date the gift was purchased for the funds to be released, telling us they said, “you already waited six months, so you just need to wait twelve more.”

Rita said, as a small business owner, she can’t afford to wait for payment and that the hundred dollars represents a full day’s pay for one of her employees, so she contacted our Consumer Investigative Center for help. After our Responds team reached out to Paypal, they explained a recent change in policy caused the problem. They credited $100 to Rita’s available balance and apologized for the confusion.

In the meantime, Rita said she has already returned to face-to-face sales of gift cards. This holiday seasons, she plans to upgrade from paper certificates to custom plastic cards offered through her credit card provider.

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