New risks with gift cards, advice for gift-card givers and receivers[SIZE=-1]As economic worries mount, some experts predict that gift-card sales will be lower this holiday season than last. Still, for the year, consumers are expected to plunk down a total of $94 billion on the cards, according to projections by the Tower Group in a May 2007 report. You can avoid gift-card hassles by giving a traditional gift or cash instead. But if you are considering buying a gift card, here are a few things to keep in mind: Avoid troubled issuers Don’t buy a card from a retailer or financial institution that you know is in trouble. Check the company?s Web site, including its shareholder pages and news releases. Do a Google search of the issuer?s name with such words as ?financial trouble.? Hand over documentation Give the recipient a copy of the terms and conditions on the card, plus your receipt. If you are the recipient of a gift card, take these steps: Use it fast Spend the entire value quickly to reduce your risk of getting stuck with a worthless card if the issuer fails. Holding on to a card also increases the chance that it will be lost, stolen, or just forgotten. Unused cards have been a boon to issuers. In 2007, for example, retailers American Eagle and Abercrombie and Fitch booked a combined total of $13 million in unused gift-card revenue, the Tower Group report found. Register it Doing so will allow you to make a claim in the event that a failed issuer properly set aside gift-card proceeds. Registration also might be necessary if you want to use the card on the Internet, monitor your transactions, or replace a card that?s lost or stolen, which also might require a receipt. Check the terms and conditions Look for expiration dates, replacement policies, fees, and the like. Keep a copy along with the gift-card receipt. Review your rights You might have additional rights, depending on your state. To see a summary of your state?s gift-card laws, go to the Consumers Union Web site. If the issuer of a gift card you hold gets into financial trouble, here are a few options: Redeem the card now If the issuer hasn?t failed, spend the remaining balance immediately. If it?s a retail card and local stores close, find out if you can redeem it on the retailer?s Web site. Complain If the issuer stops accepting gift cards or closes, check with your state consumer officials. They might be able to help, especially if the retailer has not yet filed for bankruptcy protection. Try a chargeback If the card was bought with a credit card, the purchaser might be able to obtain a chargeback from his or her credit-card company. Contact the third-party issuer If the card came from a third party, find out whether it will provide a refund or otherwise make good on the card. Such third parties include independent gift-card Web sites, supermarkets, and financial institutions that offer retail cards as part of their rewards programs, as American Express and Discover did with the Sharper Image card. Try the competition Some businesses have offered to accept the cards of troubled or bankrupt competitors. For example, as of August, Brookstone was offering people who surrendered their Sharper Image gift cards or certificates a one-time 25 percent discount off their entire order, regardless of the card or certificate value. File a claim As a last resort, you can submit a claim to the bankruptcy court. Look for the name of the court by checking on the bankruptretailer?s Web site or by doing a Web search. As a gift-card holder, you?ll be an unsecured creditor, but you might be eligible for priority status, which could put you ahead of some other creditors. Posted: December 2008 ? Consumer Reports Money Adviser issue: December 2008 *[/SIZE] [SIZE=-1]Subscribe now![/SIZE]
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