^{Photo courtesy of Design Packaging, via Flickr}

Gift cards are more than just easy stocking stuffers and somewhat-unimaginative birthday presents. They're also a cash cow for retailers. With this incentive, more companies are offering bonuses for buying their gift cards instead of their competitors'.

Unfortunately, this tactic can backfire.
As bslachc.com reports, Target became the victim of gift card fraud after a huge number of customers took advantage of some loopholes in a Facebook promotion that offered a free $10 gift card with purchase of a $50 gift card. Target made two mistakes: First, they didn't issue unique barcodes to prevent customers from copying the coupons and using them repeatedly. Second, while they did say in the small print that these gift cards were not valid for purchase of other gift cards, in practice they did nothing to prevent customers from buying them.

You can probably guess what happened next. Countless customers bought $50 gift cards and got their free $10 gift cards. Then, they spent their $50 gift cards on other $50 gift cards, getting even more $10 gift cards in the process. After repeating this process over and over again, some were able to make thousands in free gift cards, after only spending an initial $50 investment. Even worse for Target, some reportedly traded in those gift cards for AMEX ones, ensuring that none of that money had to be spent in Target stores.

This kind of oversight is not uncommon. Along similar lines, a Redditor recently discovered that Taco Bell gift cards can be spent on other Taco Bell gift cards. The best part? You can get a free combo at Taco Bell with purchase of a $20 gift card. In practice, this means you can spend that $20 initial investment and eat for free at Taco Bell for as long as the promotion lasts. It's not clear whether Taco Bell expressly forbids this kind of thing, so technically it may not be against the rules. Even so, I don't think Taco Bell execs would be thrilled about it.

Fortunately, you can take advantage of these gift card promotions without doing anything illegal or unethical. For example, if you already shop at Target, there's nothing wrong with buying a $50 gift card at Target then spending your $60 in gift cards on stuff you would've bought anyway. As another Redditor notes, Target is currently giving away free LEGO sets with purchase of a gift card, and this is an opportunity to get some free toys with stuff you already need.

The same applies to the free combo at Taco Bell promotion, though certainly eating Taco Bell all the time will have other drawbacks. For a comprehensive list of free bonuses you can get with purchase of restaurant gift cards, check out Woody's post on Restaurant Gift Card Bonus Deals. There are also Holiday Gift Card Bonuses, hosted on About.com, and Inexpensively.com's Restaurant Gift Cards Holiday Bonus Offers list. As always, be sure to verify that the offers are still valid before you buy.

And there are other honest ways of taking advantage of gift cards without gifting them. A popular trick is to use $10 Costco gift cards to shop at Costco without a membership. The process is simple: Just get a card-carrying member to buy you some $10 gift cards, then use one card per purchase at Costco. You can then put the overage on your credit or debit card. (Note: It's smarter to use many smaller denomination cards in this case, because then you can stretch that initial investment over multiple visits.)

Another trick is to buy other people's unwanted gift cards from sites like Plastic Jungle. It's common to find second-hand gift cards selling for 20% less than their face value. If you plan to shop at these stores anyway, buying gift cards this way will be just like using a 20% off coupon. As Woody notes, the best time to buy unwanted gift cards is right after the holidays.

Have your own gift card tips and tricks? Please share in the comments.