Alicia --
The laws differ by states, but, in general, gift certificates and gift cards can only be reedemed for cash from their issuing retailers when the value drops below $5, $10, or 10% of the initial value of the certificate.
A prepaid card cannot be redeemed for any value above this value set by state law, according to federal regulations.
In addition, there is an upper limit of $2,000 to these cards. This is also known as the "closed-loop exception" to FinCEN prepaid requirements. More details here: http://www.perkinscoie.com/fin...
Another write up is here: http://www.syncpayments.com/20...
Finally, in the eyes of US law, virtual currencies are usually legally equivalent to virtual gift certificates and prepaid cards. I recently did a number of articles about this for financial magazines, and talked to a bunch of legal experts.
That doesn't mean that there aren't third-party exchanges and online websites where you can sell your unused gift cards. These exchanges are operating in a gray legal area, however, and -- because of the potential for money laundering -- are not a safe long-term strategy.
In fact, there's speculation that Linden Lab has forbidden third party exchanges from buying back Linden dollars from end users specifically for this reason and that, eventually, Linden Lab will cease cash outs as well, or limit cash outs to registered business partners.
For example, consider an iTunes card. You get one of these cards as a present, and can use it to buy music and movies from Apple. You can't redeem it for cash from Apple (though you might be able to sell it to your little brother at a discount). But the musicians whose songs you buy using the iTunes card will be able to get their money -- they are Apple's business partners, not retail customers.
My bet is that Linden Lab is arguing that merchants and others who cash out their Linden Dollars are business partners in the Linden Lab ecosystem, just as musicians and ebook authors are business partners in the Apple iTunes ecosystem.
If I was a grid owner, looking for a way to offer a virtual currency, this is the path I would take -- allow only accredited merchants to cash out their currencies, and keep merchant accounts very, very separate from end user accounts.
For example, if a musician wants to get an iTunes card, they would buy it separately, through regular retail channels -- it's completely distinct from their relationship as an iTunes content provider.