Gift Cards

Red gift cardFor the person with very discriminating tastes, or for the person who seems to have everything, why not give a gift card on those special occasions, to be spent as the recipient pleases?  Well, if you are considering doing this, there are some things you should know.

An independent consulting firm estimated that gift card sales would reach 100 billion dollars in 2011 and surpass 1 trillion dollars a year by 2021.  As this easy way of giving has grown tremendously in popularity, merchants have also reaped millions of dollars from the sale of gift cards that are forgotten or not fully used.  In fact, 41 billion dollars of gift cards went unused from 2005 to 2011. 

And your gift may not turn out to be everything it seems.  Depending on the retailer, it may contain hidden charges and may expire or lose value if not used within a certain period of time.  It will be worthless if the store should go out of business.  Since cash, on the other hand, retains its value, you must decide whether cash might be a better alternative than a gift card that comes with strings attached.

A National Retail Foundation survey reports that 8 out of 10 people buy gift cards each year.  To help protect those who buy or receive gift certificates, store gift cards or general use gift cards, a Georgia law took effect in October 2005.  It applies to prepaid cards and certificates issued in a specified amount or, in the case of some cards, in an amount that can be added to.  It may be issued by a credit card company and used with multiple merchants, or it may be good at a single merchant or an affiliated merchant group, such as a mall.

The Gift Card Integrity Act of 2005 requires the purveyors of all such gift cards or certificates sold in Georgia on or after the effective date to:

  • Include the terms of the card in the accompanying packaging, make these available upon request, and honor the card in exchange for merchandise or services in accordance with those terms;
  • Conspicuously print the expiration date, if any, on the card; and
  • Conspicuously print the amount of any dormancy or nonuse fees on the card or a sticker affixed to it.

Failure to comply with the law’s provisions is considered an unfair or deceptive practice and should be reported to the Governor’s Office of Consumer Protection.

Consumers should also be aware of federal rules concerning gift cards, which went into effect on August 22, 2010:

  • Money on a gift card cannot expire for at least five years from the date the card was purchased, or from the last date any additional money was loaded onto the card. If the expiration date listed on the card is earlier than these dates, the money can be transferred to a replacement card at no cost. 
  • Inactivity fees can be charged only after a card hasn’t been used for at least one year, and then only once per month. But fees may be charged to buy the card or to replace a lost or stolen card. 
  • The card must clearly disclose its expiration date, and the card or packaging must clearly disclose any fees.

If you have received a gift certificate or card as a gift, be sure to use any remaining value on it.  If it has a low balance, you can make a purchase with that and pay the difference out of pocket.  Some cards even return the balance to you in cash if it falls below a certain dollar amount, such as $5.00.

Whether you are a purchaser or a recipient, here are some questions you may want to ask the seller of the card:

  • What is the redemption policy?  Can the gift card or certificate be redeemed for cash, a combination of merchandise and cash, or merchandise only?
  • Is there a local store where it can be redeemed?
  • Can it be redeemed on the Internet, or is it only redeemable on the Internet?
  • Will a new certificate be issued for any balance remaining after the original certificate is redeemed?
  • Can the recipient add value to or “reload” the gift card?
  • Are there any service or inactivity fees?
  • Will the card be honored if it is lost or stolen?
  • What is the merchandise return policy?

What about gift card fraud?  Unfortunately, it happens.  Gift cards are often mounted on display racks readily seen by consumers and easily available for purchase.  Criminals are recording the card numbers in the store and putting the cards back on the rack, for subsequent purchase by a consumer.  The thief waits a few days and then calls to see how much of a balance "he" has on the card.  Once the card is verified as active and with a balance, the thief goes on-line and starts shopping.

Here are tips to protect yourself and the recipient of the gift card from a scam:

  • Buy gift cards from reputable and authorized sellers only.  Purchase the gift card from the vendor with which you intend to do business.  Don't buy gift cards from online auction sites.  While gift cards offered on these sites may be cheaper to purchase, they may be worthless in the long run because they are often stolen, counterfeit or have less funds than the seller claims.
  • Carefully examine both the front and back of any gift card before you buy it.  Consider buying only those gift cards that are in secure packages or contain scratch-off or "hidden" PIN or security numbers.  If you can read the PIN number on a card you have picked up in the store, anyone else could have read the number and recorded it prior to your purchasing it.  If a gift card looks like it could have been tampered with, don't buy it.
  • Don’t buy gift cards off publicly displayed racks in retail stores.  It’s easier for a scammer to tamper with or record the PIN number from cards that are accessible to the public.
  • Ask the store cashier to scan the value of the gift card in front of you.  This will verify that the card is valid and that the amount on the card is correct.

  • Keep your receipt as long as there is money stored on the gift card.  If the card is ever lost or stolen, some retailers will replace the card if you have your receipt.