This is from the RED360 website:
"Effective March 28, the Team Member Discount and Rx Rewards will no longer be applied when purchasing third-party gift cards at Target stores or Target.com. This includes gift cards from vendors such as Starbucks, Disney, iTunes and Outback Steakhouse.
Target is making this change to align with how we process our own Target GiftCards, for which we do not offer these discounts. This change will also bring us in line with the practices of other retailers that sell third-party gift cards.
Some discounts still apply. For example, you can still save 5 percent on third-party gift cards at Target by using your REDcard."