Tips on giving and using gift cards
• Under Kansas law, gift cards cannot expire for at least five years. If the gift card does not have an expiration date on it, then it is good until you redeem it, no matter how long that is.
• Merchants can begin charging inactivity fees against the card’s balance 12 months after the card is issued. These fees are required to be printed on the card or the packaging it comes in.
• Pre-paid bank cards – the ones that are issued by a bank or credit card company, not by a specific store – can, and usually do, charge additional fees for purchasing the card, and on the balance.
• Be aware that even with legal protections in place, the value of a gift card may be lost if the store goes out of business before the card is used.
• Watch out if you’re considering buying a gift card from an online auction site or classified site like Craigslist. Those cards may be counterfeit, may have been obtained by fraudulent means, or may have a lower value than originally stated.
• If you buy the card online or over the phone, find out if there are shipping and handling fees.
• Read the fine print before you buy. There may be a fee tacked on just for purchasing. Check whether fees can be deducted from the card’s value after it’s purchased.
• Inspect the card carefully before you buy it at a retailer’s site. Verify that none of the protective stickers have been removed. Be sure the PIN number on the card has not been revealed. If the card has been tampered with, report the damage to the retailer at once.
• Consider giving the recipient the original receipt so they’ll have proof if the card is lost or stolen.
• Verify that the retailer or restaurant from which the card comes seems likely to stay in business. If the business declares bankruptcy under current laws, the prospects of redeeming the card can range from slim to none.
• Remember when receiving a card that it is best to treat it like cash. Use it quickly to assure that you get the card’s full value.
Information from the Better Business Bureau and the Kansas Attorney General’s Office.
They are the go-to gift for many of us during the holidays. For those who are hard to buy for, a gift card seems to be the simple solution. No need to wrap it. It’s easy to mail.
The grocery store has racks loaded down with them so they’re easy to find. “People like to receive them,” said Denise Groene, state director for the Better Business Bureau, adding surveys show 60 percent of folks say they enjoy receiving gift cards.
Nearly half of holiday shoppers plan to give gift cards this year according to Consumer Reports.
However, the BBB advises that, in spite of the many upsides to giving gift cards, consumers should take certain precautions when buying and receiving them, Groene said.
“It certainly is not hard to understand why retailers love to sell gift cards,” she said. Consider this statistic: over 41 billion dollars worth of gift cards went unused from 2005 to 2011. Estimates from the National Retail Federation are that shoppers will spend over 28 billion dollars on gift cards during this year.
None the less, “with Christmas just a few days away, many of us will be searching for that perfect last-minute gift,” said Kansas Attorney General Derek Schmidt. “For some of those hard-to-buy-for people on our lists, gift cards can seem like the perfect solution.”
There are other concerns as well, Groene said.
One scam that has lately been reported involves gift cards sold on large racks in some stores. Photos are taken of the back of the card where there are activation codes and a customer service number to call when checking on a card’s value. Scammers then replace the card on the rack.
They make purchases online with the information obtained. An unsuspecting legitimate user of the card is later surprised to find out that is has little or no value.
Under federal law, gift cards cannot expire for at least five years, Schmidt said. You cannot be charged a fee if you have used the card within the past 12 months.
A proposed Gift Card Consumer Protection Act in the U.S. Senate would ban gift card expiration dates and non-use fees. Companies filing bankruptcy would be denied the right to sell gift cards and would have to honor any unredeemed cards.
“If you’re among the millions who will give or receive a gift card during this holiday season, enjoy the convenience,” Groene said. “But consider the strings that may be attached.”
For more information, the BBB at 800-856-2417 or visit kansasplains.bbb.org, or contact Schmidt’s office at 800-432-2310 or ksag.org.