I’m going to be less cynical and agree with OP that it is not necessarily laundering but also a method for turning credit into cash. You could use a credit card via Paypal or even paypal credit and end up with cash. I guess someone could use gift cards from stolen merchandise but I think that’s quite a conclusion to jump to as a default assumption.
If you spend an eBay gift card, and have money left over from your purchase, it goes into your Paypal account.
I’ve got it. Great aunt Sally sends me an Ebay gift card for my birthday. I buy cash on Ebay with it, because my pusher doesn’t take gift cards.
You’d be surprised how many kids have access to their parents credit cards but don’t have access to cold hard cash
Quicker to take said cc to an ATM.
Giving up electronic credits for currency might be related to shady activities but isn’t money laundering as I’d understand the term, which would means turning currency generated from illegal activities into apparently legitimate electronic credits. This is the other way around.
As others said, the explanation is basically the same as why Amazon gift cards (for example) often sell on Ebay for more than face value. It’s because buyers are paying with expiring bonus point type credits that will be worth nothing if they wait, or else they plan to pay the seller using stolen electronic payment means, or in case of currency it might mean they want to buy something they can’t with the legitimate electronic means at hand (no using parents’ credit cards for drugs, generally).
This has not happened to me. It stays as an eBay balance. Note that eBay and PayPal are separate companies again. Certain back-and-forth automatic things aren’t done like it used to.
(And I can’t figure out a simple way to get eBay to tell me how much is left on a balance.)
OTOH, there are PayPal gift cards that you deposit straight into your PayPal account and from then on they are indistinguishable from other funds in your account. So you can buy cash off eBay with it.
You would have to know your parent’s PIN to use an ATM. Most people don’t have (or at least don’t know) the PIN for their credit cards (as opposed to debit cards) in the US.