Breakage

…Have you ever received a gift card and then not bothered to use it?…If so, you've just contributed to part of a billion…dollar industry all tied up in a term called breakage.…Breakage is big business for retailers who offer gift cards.…In 2011 alone, one electronics retailer reported $53 million…in income on the value of unredeemed gift cards.…Estimates suggest that anywhere from 10% to 19% of card balances go unredeemed…for a total of around $41 billion in the period from 2005 to 2011.…

So why are customers throwing money away?…The answer is it's sometimes hard to redeem gift cards.…And as soon as the amount of perceived hassle…outweighs the value of a card, people just give up.…And it's not just gift cards that suffer from breakage.…It's also a common technique in other industries, such as cell phone…service providers who require monthly payment…for highly variable items like data usage.…In these circumstances, the breakage is either the…number of text messages or voice minutes that…expire every month because you didn't use them,…