The following is the timeline of the fall of The Plastic Merchant (TPM). TPM should serve as a caution to gift card resellers, especially those that are new to the hobby to not risk more than you can afford to lose. While the majority of TPM sellers “only” lost ~$1k, one unlucky individual lost ~$90k.

Special shoutout to Miles To Memories for their excellent reporting on the situation as it was happening in 2018. We should also note that we are not lawyers nor financial professionals and nothing in this article should be construde as legal or financial advice.

The Plastic Merchant was a gift card aggregator. A gift card aggregator, purchases gift cards from individuals and proceeds to resell those cards (typically in bulk) at higher rates than they purchased them for. They can typically only get these higher rates because they are able to sell in bulk. The Plastic Merchant described themselves as “A private gift card buying and selling platform built for and by point, miles, and arbitrage specialists.” Ultimately, the business would grow large enough that hundreds (if not, thousands) of individuals were selling gift cards to The Plastic Merchant monthly.

Beginning in May 2018, activity at TPM ceased and sale orders were not being completed. In early June 2018, checks from TPM began to bounce creating concern (rightfully so) among users. Ultimately, the following email was sent to all sellers.

Dear Seller,

 

Unfortunately, Mike is very sick and has had to be hospitalized. We are working on things and hope to have an update for you very soon. Sorry in advance for any issues this may have caused, and please be patient with us.

 

Sincerely,

Molly

While it does not aid in the financial lose of sellers, the healthcare claims of TPM representatives were seemingly validated by the healthcare debt in later bankruptcy filings.

By all indications it appears TPM was still accepting new sell orders until early July 2018 despite cash flow problems prevalent a month prior. Throughout the time checks bounced through mid-July, sellers were still able to login to their TPM accounts and see all their historical records. However, starting in mid-July, the records became unavailable with the following message at login.

This app has been suspended.

 

The app administrator must login and update billing information to activate the app.

If sellers maintained any optimism of getting paid, this was likely when they knew it was very unlikely.

At some point between December 2018 and April 2019 (according to Waybackmachine), the TPM website was updated with the following message.

We will be back soon!

Sorry for struggle. We will provide a much better service in the near future.

We will rise like a phoenix from the ashes!

Stay tuned! You will not regret it!

Unfortunately, this would all prove for naught as the proprietor of TPM would eventually file for bankruptcy.

Details

On October 3rd, 2019, the proprietor of The Plastic Merchant (TPM) filed for bankruptcy in the Eastern District of Missouri. Notably, the filing was for Chapter 7 bankruptcy (i.e. liquidation) rather than Chapter 11 bankruptcy (i.e. reorganization). In summary, such typically means that individuals who sold gift cards to TPM (non-priority unsecured creditors) are unlikely to recover a significant amount of funds owed to them.

 

The Numbers

Overall, the proprietor of TPM claimed $117,969 in assets (value of things they own) versus $836,553.70 in liabilities (value of things they owe). Looking more in depth, the proprietor owed $341,811 to credit card companies of which ~40% was owed to Chase and ~25% was owed to American Express.

Overall, in terms of gift cards, there were 342 people who lost money (or were at least listed as creditors) with TPM owing a collective $480,855. Such ranged from $4.35 (the lucky one) to $89,994.40 (the very unlucky one). Of the 342, “only” 4 lost $10,000+, 13 lost $5,000+ and 101 lost $1,000+.