Show #335 Airing Sunday, 4/2/06
"Say it with flowers" used to be the rosy response to the question of what to buy that person who "has everything." Now "say it with a gift card" is more likely the answer. While gift cards can be a great solution to your shopping dilemmas, are they as convenient and safe as we think? My gifted partner, Mike Solomon, is here to explain.
Question: How common is the use of gift cards today?
Answer: Very common. In fact, the Federal Trade Commission recently reported that consumers spent $18 billion on gift cards and certificates for the 2005 holiday season.
Question: That's a lot of gift cards! Does that mean that they are safe and easy for the reipient to use?
Answer: Unfortunately, there are a number of "strings" that could be attached to a gift card you may give or receive. The most common "strings" attached to many of these cards include:
- Expiration dates.
- Multiple Fees.
- Limitations on use (for example, not on-line).
- Difficulties using the balance on the card after an initial partial purchase.
Question: Canyou give us and expample of the problems people face?
Answer: Let's say you pay $50 for a gift card for your son. You child's busy and doesn't use it immediately. When he does make it to the store, he finds that the card has expired. Or maybe various fees have eaten up half the value. Or perhaps he used it once to buy an $18 CD, and now he wants to use the balance toward a $40 purchase, but the card is rejected because the store can't determine how much is left. Unfortunately, all of these problems (and more) have occurred.
Question: This seems very unfair. Have our legislators taken any steps to fix these problems?
Answer: The Ohio legislature has recently passed a law which would set certain standards for gift cards. The most significant provisions include:
- No gift card may expire within two years of the sale.
- No fees may be charged (within two years) which would reduce the redemption value of the card.
- Any gift card sold without an expiration date shall be valid until redeemed or replaced.
Ohio is one of the first states to adopt legislation designed to provide consumer protections for gift card purchases.
Question: Are there any limitations under the new law?
Answer: One of the biggest gaps in the law is that it does not apply to bank gift cards issued by major credit card companies that are usable at most stores. Such cards are more likely to charge fees, and they are exempt from the law. On the other hand, the cards subject to the law, ones usable only at specific retailers, don't usually charge fees anyway.
Question: Any other limitations with the law?
Answer: Another limitation involves the penalties for a violation. The law gives the consumer the right to sue a company that charges a fee in violation of the law, but no right to sue a company that issues a card with less than a two year expiration date. A third limitation exists within the penalty provisions. If you sue a company for unlawfully charging a fee, you can recover the fees, court costs and attorney's fee, but there is no "punishment" against the company for the unlawful charges. Other consumer protection laws allow the individual to be awarded triple the damages or $200, whichever is more, to punish the company. Unfortunately, that penalty provision does not exist in this new gift card legislation. To sue, you'd probably go to small claims court.
Question: Where can our viewers look for more information?
Answer: There is a website that can explain consumer's purchase and recovery rights. To learn more, contact the Federal Trade Commission at www.ftc.gov.
My thanks to Mike Solomon for giving us great information about gift cards, so we won't be led down the "primrose path"! For more information, the number's next.
