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Michael Conroy / AP
Despite their popularity, gift cards are not the same as cash.
Chances are you gave or received at least one gift card for Christmas or Hanukkah. Once again this year, these cards were the most requested holiday present.
Despite their popularity, gift cards are not the same as cash. They can expire after five years (unless prohibited by state law) and there may be dormancy fees for not using them.
Sen. Richard Blumenthal (D-Conn.) wants to ban inactivity and service fees, and prohibit expiration dates on all gift cards and gift certificates. His Gift Card Consumer Protection Act would do that and much more.
“This bill bars absolutely draconian deadlines and abusive fees and charges that unfairly confiscate consumer gift card cash,” Sen. Blumenthal said in a statement. “Gift card companies fatten their profits and shrink consumer wallets with exploitative expiration dates and petty, underhanded junk fees. Gift cards should not be the gift that keeps on taking. This measure assures that consumers get their money's worth, no matter when they use the gift card.”
The Gift Card Consumer Protection Act would also prevent loyalty, promotion and awards cards from expiring. These are the type of gift cards you get as a bonus for buying a product or redeeming credit card points. Many of these cards expire in as little as 30 days.
The bill would also reduce the chances that you’ll get stuck with a worthless gift card. It would require a company that files for bankruptcy to honor its unredeemed gift cards and prevent that retailer from selling any more of them while under bankruptcy protection.
Sen. Blumenthal’s office reminds us that when Sharper Image filed for bankruptcy in 2008, the electronic gadgets store stopped accepting its own gift cards.
“We think this bill is a welcome present for anyone who’s been short-changed by a gift card,” said David Butler with Consumers Union, the advocacy arm of Consumer Reports. “We believe you ought to receive the full value of your gift card. You should be able to use it when you want it without any concern that the card has expired or that it’s no longer accepted.”
Companies that issue gift cards generally oppose the bill. The Network Branded Prepaid Card Association calls the proposed ban on expiration dates and service fees “unworkable restrictions” that could change the market for these cards.
“Consumers would likely lose access to many gift and promotional cards if all fees are prohibited – even after 12 months of inactivity – because the card programs would likely be discontinued as uneconomical for program providers,” said NBPCA president Kirsten Trusko in a statement to NBC News.
While inactivity fees provide profit, Trusko said they also pay for things such as customer service, protection against lost or stolen cards and fraud protection. Expiration dates are needed on promotional gift cards, she insisted, because like coupons they encourage consumers to visit a store or restaurant during a specific sales period.
“Forcing promotional cards to have no expiration date would undermine the usefulness of such cards for promotional purposes,” she wrote.
The American Bankers Association (ABA) hasn’t officially opposed Sen. Blumenthal’s bill. Instead, it questions the need for more government regulation in this area.
“The law is not necessary,” said ABA spokesperson Nessa Feddis. “We don’t know what it would do.”
Feddis wants everyone to know that a gift card never really expires, even when there is an expiration date on the card.
“The funds can’t expire, only the card,” she said. “All the customer has to do is call the company to get a new card issued.”
Feddis also emphasized that the companies that issue these cards don’t get to keep the money if they’re not used. After a certain period of time, normally seven years, any unused funds go to state’s unclaimed property office.
What to do with unwanted gift cards
Plastic Jungle, a company that buys and sells unused gift cards, estimates that the typical American household has unused gift cards worth an average of $300. That’s billions of dollars sitting in purses, wallets and dresser drawers.
Don’t let this money go to waste. If you don’t plan to use the card for yourself, use it to buy a present for someone else, donate it to a charity or turn that card into cash.
Sites such as Gift Card Granny, Gift Card Rescue, CardPool and Card Cash buy and sell gift cards.
“If you received a gift card to a store you don’t like or a restaurant that you don’t go to, the card is essentially useless to you,” said Kendal Perez with GiftCardGranny.com. “So being able to exchange it for cash gives you the ability to get something out of that card.”
For a popular store, such as Target, Amazon or Wal-Mart, Kendall said they pay 90 percent or more of the card’s value. For other merchants, expect 70 to 85 percent.
TIP: Shop around if you want to get the most for that unwanted gift card. Offers can vary greatly from site to site.
Eliminating gift card 'gotchas'
Gift cards are big business. The TowerGroup expects total sales for the year to hit $110 billion. As the market for gift cards has grown, so has the need for improved regulation.
The Credit CARD ACT of 2009 prevents gift cards from expiring for at least five years. That’s good, but more should be done to eliminate the remaining gift card “gotchas.”
The Gift Card Consumer Protection Act makes sure you won’t be shortchanged when you give or receive one of these cards.
Herb Weisbaum is The ConsumerMan. Follow him on Facebook and Twitter or visit The ConsumerMan website.
Leave a Comment:
There's this great thing. It's similar to a gift card, except it can be used anywhere and it never expires or charges you a fee. It's called cash.
Leave abusive fees to the pros at the bank and credit union.
The last time I bought a gift card, and I mean the LAST time, the person at the other end of the phone when I was activating it demanded the social security number of the person I was giving it to! I told him I didn't know my five year old neighbor's SSN, and I wasn't going to ask his parents for it. He then demanded my SSN! I was on the phone for a half hour with multiple levels of management. Eventually they activated it. This was a Visa gift card bought at Wal-Mart.
Just give CASH! It always worked for me in the past and unless the U.S. goes bankrupt (AND IT MAY JUST DO THAT!) MONEY IS GOOD FOREVER!
Gift cards really are stupid gifts. If you are going to give someone cash, then give them cash. To give them a gift card that restricts where they can spend the money really makes no sense. I know that some people have this feeling that a gift card is somehow more thoughtful and shows that you put a little more effort in selecting the gift, but this is nonsense. The odds are the person you are giving it to would rather have the cash to use as they see fit.
As for the claims from the companies about expense to maintain these gift card accounts I say bull@!$%#. This is all completely automated in a computer system and it probably costs less than a penny a year to maintain the account data for a gift card. There is no valid reason to charge inactivity fees or have cards expire. In fact, the longer the card goes before it is used the more money the store actually makes. This is because the person has actually given the store what equates to an interest fee loan by buying the gift card. The company already has the cash to invest or use for other purposes while the value is sitting stored on the gift card. Also, as time goes buy, the true economic value of the money on the card goes down due to inflation, so the cards are being redeemed later as "cheaper dollars" than what they were purchased for.
The worst Gift Certificate is when you have to spend to even use it. Get a $100 gift cert from a relative like I did for Christmas, to a hotel chain that charges $150/night minimum and up, and you are sunk.
Yeah, shame on them for buying you gifts that aren't to your standards!
Good grief.
I took my daughter to a medical clinic because we thought she had broken her ankle ... they don't take cash! Our dentist won't take cash, our dermatologist won't take cash. I am looking for a new dentist and a new dermatologist! I hate these bogus charges the these gift cards force upon you. I am never buying one EVER, EVER, EVER ... and that's a very long time!
This is not a great thing. Anytime government pokes its nose into the market, is a BAD thing.
Don't like gift card fees, don't deal with them.
Oh thank G-d they don't have any important to do... BALANCE THE @#$@#ing budget people!!
That is what they are trying to do. Every $ they save you in cases like this, is a $ they can grab. Its interesting how business need to make their budget fit their revenue; but, the government demands that the revenue fit their idea for a budget. That is if we had one:(
Fretting over gift card fees ??......Legislators in Washington State have also been busy imposing a New Fee on owners of electric vehicles.....$100 a year because they won't be paying their "Fair Share" of State Gasoline Taxes !!! People have no jobs, driving less....Gas Tax revenues are dropping like a rock !!!
And you thought Going Green would set you free !!!!
http://www.spokesman.com/stories/2012/dec/25/electric-car-owners-face-fee/
Watch how fast this spreads Nationwide and to the Fed's over declining gas tax revenues......
Mike in Delray
Um, gas taxes are how the roads are maintained. If you do not wish to pay "your fair share" then don't drive.
nutgrape...You missed my point entirely....Part of the sales pitch was that you wouldn't have to pay Federal and State Gas taxes anymore if you bought a Plug-in car....
"Um, gas taxes are how the roads are maintained."
Then tell me why the roads and bridges are in such terrible shape, so bad that P.0bama pushed for $$ Billions in his Stimulus for all those (not so ready) Shovel Ready Road projects....and now he's looking for another $50 Billion ?????...Basically all I saw were some potholes being filled with a sign saying "YOUR STIMULUS MONEY AT WORK"....The signs cost more than the filling of the pothole.....Scheesh !!!
Mike in Delray
Perhaps I missed your point because you did absolutely nothing to enumerate it.
The roads are in such bad shape because people like you do not wish to pay what it costs to maintain them. Your innumeracy is hilarious.
nutgrape...."The roads are in such bad shape because people like you do not wish to pay what it costs to maintain them."
I "commuted" almost 1,000 miles a week between my home in Pennsylvania to where I worked in NYC for nearly 3 decades....I think I paid my fair share of gas taxes and tolls....Now-a-days I ride my Hover-round to the grocery store and only drive the car for my doctor appointments.....
Have a nice evening....
because gas tax revenues are down? thus necessitating more fees. Everyone wants low fees and taxes but when things actually start to break down because of this the only thing citizens seem to do is complain.
"But I wanted nice roads, and they should be free, duh. Google Ron Paul."
Idiots.
So you paid taxes in the past? Want a medal? That's how our society works, you pay in, the public benefits. The taxes you paid for three decades were used - to repair the roads. They don't stop falling apart just because you don't "commute" across America anymore.
g
I'm with you, Chitown. I'll gladly pay more tax. Just use it effectively and fix things. I won't complain.
I'll pay taxes for what I use in public benefits, not for a slush fund for liberals as it is now!
TD Bank started pulling this crap years ago. Bought gift cards, found out later there is a "transaction fee" with every use. Bottom line.. a $50 gift card isn't worth 50 bucks. So I got screwed and so did those I gave the cards too. Some of the cards got thrown out with 10 bucks or more left on them.
I no longer buy those bogus Visa gift cards with fees attached from TD as a result. Or ANYWHERE for that matter.
"Feddis wants everyone to know that a gift card never really expires, even when there is an expiration date on the card.
“The funds can’t expire, only the card,” she said. “All the customer has to do is call the company to get a new card issued.”
Then why isn't that little fact listed anywhere, like right after the part that tells you it expires? Because he's a lying dirt bag or its hidden on the middle of 5 pages of fine legal print no one ever sees or reads.
“Forcing promotional cards to have no expiration date would undermine the usefulness of such cards for promotional purposes,” she wrote."
Usefulness for who and when did the name change to "promotional cards"?
Translation "we wouldn't make as much. "
If you're going to give a gift card why not just give cash? It can be used anywhere and it won't magically disappear if you tuck it away for awhile.
“Forcing promotional cards to have no expiration date would undermine the usefulness of such cards for promotional purposes,” she wrote."
Usefulness for who and when did the name change to "promotional cards"?
Promotional cards aren't the same as gift cards. Applebee's currently has a promotion that offers a $10 card with every $50 card purchased. The $50 card has no expiration date, but the $10 card does.
The promotional card is essentially a $10 coupon, and every coupon I've ever seen has an expiration date. The government has no business forcing policy changes on these.
This law is absolutely needed.
How is this a function of the federal government.
It is called Interstate Commerce. Duhhh
Yes, you can bastardize the interstate commerce clause to mean anything you want. Just ask the court that ruled because you grow wheat for your own consumption you are affecting interstate commerce and thus the federal government can regulate.
Creating these laws at the federal level is more big government that does not allow the citizens of a state to "vote with their feet".
If YOU don't read the fine print on something YOU'RE purchasing, why should it be the government's business to regulate it? Whatever happened to concept of PERSONAL RESPONSIBILITY?
whatever happened to the concept of honest merchant.
Usually the fine print for one of these cards require a magnifying glass to read. Hard to do at the checkout counter or standing in the asile in a crowded store
And nowhere does it state you can call and get a new card.
It's the governments business when one person abuses the freedom of another. This country would be changed over night if the people would just wake up to that fact, it's been played out a million times and is why the government is as large as it is. Abusing another's freedom and the consequent growth of government was supposed to be a deterrent keeping people from empowering the government.
Deal falsely and the government has an opportunity to regulate (fine print has always been associated with a false deal). The fact that government is deliberately abusive of any power and highly inefficient should be enough for people to deal fair with each other, sadly that isn't a majority concern anymore. It's been replaced by the love of money, the root of all sorts of evil, the necessity to regulate being one of them.
B.S. cards aren't a win win for those that sell them. What would you do with a million dollars you didn't have to give back for a month and I'd suspect the total is way way more than a million? Those that sell them I'm sure count on a percentage never coming back, some business practice when you count on cheating people. Your reason #1 the government is the size it is and thanks to you getting bigger soon.
I agree that gift cards are promotional. Stores often offer gift cards in lieu of a direct price reduction on an item. It's a good business practice to get a customer to shop at the same store again.
I think it is not necessary for the government to be so involved in the gift card market. Personally I think gift cards are very thoughtless gifts - basically an excuse to not feel guilty about just giving cash.
If someone obtains a gift card and it is not used before it "expires" then why would they bother with a gift card in the first place? Seems to me that an unused gift card would be the result of a badly thought out gift or an example of a customer who accepted a gift card from a store instead of cash not realizing that they don't actually shop there often.
While I appreciate our Congress working on such important things as gift cards - why not focus your attention on other things such as taking care of the fiscal cliff, the budget and tax cuts.
Sure, Congress should be working on protecting us from another recession, but does that mean that there is nothing else of importance to Americans that deserves its attention? Consumer protection is a legitimate concern of government, even if it results in forcing businesses to (gasp!) treat people right. We're at a point in our history where many people want any entity that's "a business" to be able to do anything they want to us, all in the name of profit. I'm happy that this bill is being introduced, but sad that something like this is necessary to get big banks and corporations to treat consumers with respect and fairness.
The governments job is to regulate bad behavior and be a spoiled 3 year old doing it causing people to work together to solve their problems, not fix economy's we the people are to glutinous to stop ravaging. This card thing is exactly what it's supposed to be doing and even more so while much larger problems exist. Will this cause people to change and reduce the opportunities for government to do this? Not on your life! People don't even understand how government gets opportunity much less have an ounce of will to do a thing about it. The opportunities for government to grow isn't measured in pounds anymore, now it doubles in size and every bit of it the peoples fault and voting has nothing to do with it. That's just a flavor pick, everything else has already been determined.
After reading the article, I see there are several things wrong with the whole gift card set-up.
Why doesn't the retail store get to keep the unspent cash? It doesn't seem fair that it eventually goes to the state. The store should be able to invest that money and earn income from it. The cash on the card should always be there for the customer - even a decade later. Just like if the customer were to find a $20 bill they lost 10 years ago, the gift card should work the same way. It's cash for cash. There should be no loss to either retailer or consumer if the card goes unused for a long period of time. That's what's bogus.
As for promotional gift cards, meaning the store gives the card to the consumer (rather than the consumer buying it) I think it's fair to have an expiration date - just like coupons and rebate offers. Stores set up promotions and budget for them, so unlimited expiration dates make promotions less feasible. Target sometimes gives Target gift cards for purchasing X amount of a particular product. As long as it's clear at the time I buy, and receive the gift card, that it expires and when, I'm ok with that. That's just part of the deal.
I would never buy a gift card I knew came with fees or an expiration. The mall here has the most ridiculous gift card policy - and they promote the snot out of it. When you buy the gift card, they charge you a fee on top of the gift card amount. Then, it loses a few bucks each month if it's not used. When they told me their policy I just laughed.
Gift cards are nicer than cash. It at least shows that you put some thought into the gift. You just have to make sure you know the person well enough to know where they like to shop or dine. I gave my teenage daughters and their friends gift cards to some of their favorite places and they were thrilled. The cards were used the day after Christmas!
The fees are just a way to clear accounts. If you get a 50 dollar giftcard and use 49, odds are the card goes in the trash afterwards. The company them has to track the remaining balances for years then report and pay the amounts to governments as unclaimed property. Of course the government is going to complain if companies set up administrative fees that zero these remainders to make their own lives easier, the government wants to sit on the cash and collect interest off of it. Companies do this to limit the cost of government red tape. The government just wants to write a law to prevent companies from doing this out of greed.
Gift cards are such a scam... instead of giving a $25 gift card to BuckStars, give them $25 cash. Not eveyone likes the coffee at BuckStars. Better yet, cash doesn't expire.
Thanks, Senator, for saving the truely stupid folks in your state from themselves. With IQs in the low double digits, they need all the help they can get ..... but, the rest of us can get along without more nanny-state crap from folks like you. You guys can't seem to do your job in DC, but you have time to screw around on crap like this? Wow, the folks that elected you are real dolts......(it's in the dictionary, look it up)
How in the hell is this the business of the federal government??
Well, it's the business of the Federal government because someone has to protect consumers. Are you willing to let companies police themselves? Yeah, that's worked so well in the past. Virtually all consumer regulations have resulted from abuses by corporations ripping people off.
Bull. It's called the free market. If you don't like the fact that a gift certificate has an expiration date on it, don't buy it. It's that simple. If people stop buying them due to the restrictions then they'll remove the restrictions.
Stop expecting someone else to be responsible for you.
Bull it's called freedom and freedom has demands, you are only free to obey it's demands, violate them and you lose your freedom. It's cap stone all other minor demands fall under is if you want your "free" market you must not abuse the freedoms of another to benefit yourself, you must not infringe upon the financial freedoms of another to benefit yourself and taking advantage of their ability to understand compounds the offense, you understand and that's all that matters. Protect the freedoms of others and you can have a "free" market, abuse freedom and you will lose your own freedom to conduct business freely.
How in the hell is this the business of the federal government??
Oh, gosh.....I just noticed my credit card has an expiration date on it. OMG!!! OMG!!!! OMG!!!! How come my GOVERNMENT hasn't protected me from this awful thing that might happen to me.....credit cards should be forever.....suppose I was at a store trying to buy something really important - like a six pack of beer - and my credit card was rejected because I was too stupid to see it had expired....so I couldn't get drunk like I like to.....my whole life would be over.....I NEED PROTECTION
You're kidding, right? I don't know what credit card company you use, but mine always sends me a new card before the old one expires. Besides, we're talking apples and oranges here. Credit cards have a expiration date clearly printed on the front. Many gift cards don't, hence the point of the legislation.
Grandfather is just confused, norm. You know how it is with old people and newfangled stuff like gift cards. They LOOK like a credit card, so he THINKS they're a credit card. And he thought the expiration dates they were talking about were the ones on his credit card and he's stupid enough to believe (his words, not mine) that he'd lose it if he didn't use all his credit up by then. Not to worry though, I think he just wanted to come up with a comment that sounded hip ;)
finally someone brave enough in congress to take on this huge problem of gift cards. nevermind that we dont have a budget or are spending 100 times more than we take in, these evil gift cards need to be stopped now! ban gift cards or at the very least make people register them with the govt.
But no one pays for a coupon, therefore, it's like apples and martians.
Good point. See also what the gift card companies and their apologists do (besides their convoluted attempts to justify their various scams). They immediately throw out the dreaded conservative keyword "regulations", and instantly all their little minions chime in; "Regulations, regulations, we don't need no stinking regulations!" Notice that since this last election, virtually every large company out there has learned to do this when somebody complains about, and sheds light on, their deceptive practices.
The problem with gift cards is that lazy idiots buy them.
Prosperity is such a hard thing to live with.
Isn't it something when a gift is given and the giver is called a lazy idiot for thinking of you and taking their own money to buy something for you. Sadly, because prosperity is such a hard thing to live with, people really need to starve a little in order to learn how to be thankful.
You've been given a great gift, give it to someone who needs it and feel really great, it didn't cost you a dime and be thankful it doesn't mean anything to you, you could be the person to whom it does mean a lot.
Translation: If we're not allowed to rape our customers, we won't let them do business with us.
Typical.
Gift cards are for MORONS. Is that simple enough for you.
Funny thing is I've never heard anyone complain about this before, outside of the RedTape dude at MSNBC.com. I know a few folks who had cards expire on them, and they all said "That's what I get for letting it sit around for two years". If people wanted to use it, they would have. It's no different than getting a present that is of no value to you. You don't use that either, and it sits around until you throw it out one day. Both scenarios are just examples of people throwing money away because they think they have to give "something".
That's why I tell people I don't want any gifts during the holidays. Give it to a charity instead of buying me something I am not going to use...
This is hysterical:
“Forcing promotional cards to have no expiration date would undermine the usefulness of such cards for promotional purposes,” she wrote.
Who cares about your "promotional purposes"? We care about giving consumers a fair shake, you idiot!
“The law is not necessary,” said ABA spokesperson Nessa Feddis. “We don’t know what it would do.”
It would treat people fairly as any dolt can see. What you mean is you DO know that it would reduce your bottom line so you pretend not to understand!
Convenience. like these gift cards, still costs money to create and bring to the market. Without a way to recoup these costs merchandisers will simply stop offering the gift card option. I don't care either way, but I'm willing to bet people don't realize this.
People aren't being treated "unfairly". Most people use these cards in a timely manner and don't have any problems. It's the disorganized dolts of the world that bury these gift cards in their wallet or on their desk and forget about them that whine and cry when they can't use them. People like that don't need protecting, they need to read a book or take a class on organization.
It's those dolts that make gift cards a viable product to offer to the public. They are the ninnies that never redeem the cards and therefore cover the costs of running a gift card program. But we have to protect stupid people from their own stupidity, and we all lose gift card programs as a result. Once again the lowest common demoninator ruins it for all of us...
Tim, I think you are forgetting the value of gift cards to the merchants. Every store branded gift card is a sum of "cash" that cannot be spent anywhere else but at that store. That has to be worth something to merchants. Besides, many gift cards carry an up-front cost to the giver. Ever get a gift card for Simon Malls? They charge something like 5 or 7% above and beyond the value of the card when the card is purchased. And they still feel that they need to stiff the recipient as well. If captive cash isn't worth anything to the merchants then by all means let them stop offering gift cards.
Wow... real important stuff these lawmakers are working on these days.
It is. It's a pure attack on consumers.
It's hardly an attack on consumers. It's another bill in Congress to protect people from their own laziness, disorganization, and stupidity. And what will happen? Gift cards will no longer be a viable option for businesses to offer and they will disappear. So we ALL lose out because, once again, the lowesst common denominator ruins it for everybody.
Having worked at corporate for several retailers as an executive, I can personally attest to the fact that nearly 1/3 of these cards/gift certificates are never redeemed. This is pure profit for the retailer and more than makes up for any costs, replacement costs, fees and other associated "expenses" claimed.
As an executive working in the banking and financial side of major retailers, these quarterly reports consistently produced results that 30% of these cards would never be redeemed. Forever lost in someone's desk drawer or stashed somewhere forgotten. Retailers count on these forever forgotten cards to add to their bottom line regardless that they are "booked" on the liabilities side of their Profit & Loss statements. I assure you, this is a Red Herring for the gift card industry and consumers should be protected on abusive fees. The facts the retail industry claim just don't add up. Ask anyone who works in financial accounting department of a major retailer who handles the liabilities report for gift cards. Trust me, I loved seeing all those unclaimed dollars propping up the bottom line every quarter.
To sum up Garry's post for those that don't want to read it - 30% of people are too stupid to use their gift cards in a timely manner.
It's funny that the banking industry opposes legislation because 'we don't need more government regulation'. Boy, if there is really a need for some, it's to keep consumers from being ripped off.
Consumers aren't being ripped off. They are too disorganized, lazy, and stupid to use their gift cards in a timely manner. Once again we are protecting the stupid from themselves...
I would --bet-- that everyone is THAT or THAT and AT TIMES worse-or-better; and we all have smart days and dull ones, but, isn't their really a lot going on that anyone has to even WORRY about a stupid 'gift card'. YEAH, PROTECT THE PEOPLES HARD EARNED $$. Why not? Isn't the government in place only to make LIFE BETTER IN EVERY WAY POSSIBLE? For everyone equally?