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The Christmas present no one should give

By Glen Ashman

Beware Of Gift Card 'Gotchas'
Forbes 
Weakened and bankrupt retailers may leave consumers stranded with $100 million of worthless store gift cards this year, according to some estimates, though many stores are honoring their cards, at least for now. Circuit City is one. It filed for bankruptcy earlier this month but is still allowed to sell new in-store cards and honor its existing cards, the outstanding dollar amount of which it wouldn't disclose.  Uncertainty is one reason overall gift card sales are expected to fall 6% this holiday season, to $24.9 billion, according to the National Retail Federation. More bad news for retailers, as fewer cards given as gifts could also mean potentially fewer people hitting those post-holiday sales... Store-branded gift card sales will take a 14% hit this year as buyers flock to bank-branded or other types of cards that can be used more universally and for necessities like groceries and gasoline. Bank-branded cards are expected to see a 5.6% increase in sales this year...That's because it's getting too risky to buy cards that can be used at only one company. Retailers entering bankruptcy this year include Mervyn's, Linens 'N Things, Sharper Image, Mrs. Fields Cookies, Shoe Pavilion, Tweeter, Bennigan's and Steak & Ale Restaurants, Value City Department Store, Steve & Barry's and Boscov's Department Store. And other retailers, like Ann Taylor, are pulling back and closing stores...

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Gift-Card Contract Breach, Deception Claims Proceed
New York Law Journal

A class action against leading gift-card distributor Simon Property Group will go ahead after a New York appellate panel's finding that the company's imposition of improperly disclosed "dormancy" fees may constitute breach of contract and deceptive business practices. The proposed class would comprise New York residents who were issued cards before April 2005. The fees have resulted in similar actions in numerous states, including Connecticut, Massachusetts and New Hampshire.
http://www.law.com/jsp/article.jsp?id=1202425398215

Full post as published by It's (Barely) Legal on November 23, 2008 (boomark / email).