Help, My Gift Card Expired!

What fast food is to the hungry commuter, gift cards are to the harried shopper.

Tucked into stockings at Christmastime and taped into cards for birthdays, these easy-to-purchase plastic tokens of affection remain remarkably popular.

That's despite the fact that trading cash for a gift card is not always a good deal.

Americans, though, can't seem to get enough of their gift cards any more than they can get enough of their Big Macs.

Here's what savvy consumers will want to know about gift card expiration dates, fees and the evolving patchwork of laws that protect gift card holders.

About 61 percent of the population bought a gift card during the 2007 holiday season, and retailers sold about $70 billion worth of the cards that year.

The cards proved only slightly less popular in 2008 amid the struggling economy. Shoppers still grabbed up gift cards emblazoned with catchy, colorful designs from brand-name retailers.

It's easy to see why. The cards are one tasteful step removed from giving cold, hard cash. And best of all, the gift giver is also bestowing one of modern life's highest prizes on the gift card recipients: the right to choose what they want, when they want it.

But ever since gift cards started their blazing ascent in popularity, many consumer advocates — and more recently, state and federal lawmakers — have found reasons to criticize the cards.

Many gift cards deliver exactly what they promise.

But some cards expire quickly — more quickly than shoppers are able to spend them. And certain cards lose their value slowly over time, eaten away each month through "dormancy fees."

That's not so nice for the gift card recipient, and it lends new meaning to the adage: 'Tis better to give than to receive.

I once interviewed a woman who explained to me how her daughter had been carefully saving a gift card for a special occasion. She was shocked — and angry — to learn the card had lost nearly all its value by the time she tried to use the card at a local mall.

At the time, regulation of gift cards was in something of a Wild West phase,and only a half dozen states had laws offering consumers protection against unexpected gift card terms.

Since then, there have been loud complaints — and even lawsuits — over some gift card issuers' practices. An increasing number of state legislatures have taken an active interest in limiting expiration dates and fees for gift cards.

There has even been action on the federal level.

Limits on expiration dates for some gift cards — and a requirement that disclosures be printed with "at least 10-point type — were written into the Credit Card Act of 2009. The portions relating to gift cards are not yet in effect.

Even with new laws, though, many loopholes remain for retailers, and the stated "value" of a gift card may still change with time and circumstances.

Read on for some pitfalls to look out for when choosing gift cards, though keep in mind that laws are ever-changing.

WHERE DID YOU GET THE GIFT CARD?

• State laws vary widely in the kinds of restrictions placed on gift card issuers. California has regulated gift cards for more than a decade, while Pennsylvania still places no restrictions on gift cards. And even among states with regulation, the definition of "gift card" is not constant.
  
• In some states, cards that can be used at multiple stores — such as mall gift cards and debit card gift cards issued by financial institutions — aren't covered by some gift card laws.
• In Texas, for instance, mall gift cards don't not meet the state's definition of "stored value cards." Neither do gift cards from certain consumer loyalty programs.

WHEN DID YOU GET THE GIFT CARD?

• A number of state laws are relatively recent. If a law went into effect in 2008 — as some did — that means the new rules may not apply to older gift cards that have been stashed in a sock drawer since Christmas 2007.
• Also, where expiration dates are allowed, the clock starts ticking the day the card was purchased. That might not be the same day (or even the same year) that the card was bought.

HOW DID YOU GET THE GIFT CARD?

• It matters how the gift card was acquired. Gift cards issued as freebies at a charity event, for example, might not be subject to a state's regulations.
• And what about gift cards that are given to employees by their bosses as "bonuses" for a job well done? If you live in Ohio and several other states, those cards may be excluded from gift card laws.

WHAT IS THE GIFT CARD FOR?

• In Oklahoma, gift certificates for food items are allowed to expire.

For a detailed, state-by-state guide to state gift card regulations, go to the article Gift Card Laws.

Even when consumer protection laws do apply, there are still opportunities for a gift card to lose all its value: Say the store that sold the card goes bankrupt?

And so it goes. With gift cards, as is so often the case in life, the details matter.

It truly pays to read the fine print — all of it.

Just be prepared to spend some time interpreting the legalese.

E. A. Wright has received (and given) numerous gift cards. She has written previously about some of the problems associated with gift cards and gift certificates.

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