Jeanette A. Tucker | 12/4/2007 2:34:32 AM
Gift cards are great for holiday giving – recipients love the option to pick out the exact item, color and size that they want, and givers enjoy their one-size-fits-all convenience and easy availability.
What may seem to be the perfect gift also can come with potential risks and costs, according to LSU AgCenter family economist Dr. Jeanette Tucker.
Holiday gift card purchases are expected to reach an all-time high this year with predicted sales of $35 billion, an increase of 25 percent over 2006. A recent study by Comdata Stored Value Solutions projected that the 2007 holiday season will find the average gift card purchaser spending $203 on gift cards, up $17 from last year. The average amount of each gift card is projected to be $53, up from $46.
Whether you’re giving or receiving a gift card, Tucker offers a number of reminders. First, familiarize yourself with the different types of gift cards available. A big distinction lies in the card’s use and fee structure, Tucker says.
Retailers’ cards typically carry no fee and can be used only at that retailer. About 92 percent of retailers’ cards have no expiration date or dormancy fee. Some cards may be used only at the retailer’s store location; others may be used both online and at the retailer’s physical store.
Cards that carry the label of major credit card issuers can be used in many places. These cards impose a processing/purchase charge ranging from $3.95 to $6.95. They are valid until an expiration date, after which monthly deductions are made until the balance is zero. These cards can be used anywhere that similarly named credit cards are accepted, even abroad.
“Be aware of the terms and condition of all gift cards,” Tucker says, explaining that the Federal Trade Commission oversees gift cards and requires all gift cards to include a printed guide to terms and conditions for the card.
Read the fine print before you buy. If you don’t like them, buy elsewhere. Find out if and when the card expires, if there are fees for checking the balance or any other rules. Be sure to share the terms and conditions with the recipient.
Encourage recipients not to put gift cards away and forget them because, if they expire, the entire balance of the card could be lost. One Louisiana law prohibits gift cards and gift certificates from having an expiration date that is less than five years from the date of issuance. The expiration date must appear in capital letters in at least 10-point type on the gift certificate.
Another Louisiana law says that gift cards and gift certificates not redeemed three years after December 31 of the year in which the certificate was sold are presumed abandoned and their value reverts to the state.
“Spend gift cards before the government takes the money away!” Tucker advises. Yet, consumers fail to use about 10 percent of the money on gift cards.
The greatest drawback of gift cards has always been the fees associated with them, but Louisiana legislation also prohibits gift cards and gift certificates from having fees in excess of a one-time handling charge of $1. This means that a gift card or gift certificate cannot include service fees or dormancy fees that are typically charged if the card has not been used after a certain amount of time.
Along a similar vein, the U.S. Treasury’s Office of the Comptroller of the Currency, which oversees national banks, has issued guidelines for national banks that are selling gift cards. The office emphasizes the need for disclosure of policies and fees both on the card and on a separate brochure to be handed out with the card.
The gift card itself must have the expiration date, the amount of the monthly maintenance fee, dormancy fee and any other fees and additional information for customer service, including a toll-free number or Web site address. Provide the recipient with the original receipt with the value of the card purchased in case there are problems when the card is redeemed.
Report lost or stolen gift cards to the card issuer immediately. Some companies will replace a lost card (for a fee), others may not. Improved technology enables some retailers to reissue a lost card if you have the original purchase receipt.
Some retailers also encourage gift card recipients to register their card through the store’s Web site, which enables cardholders to check the balance online and receive a new card if the original is lost or stolen. You’ll likely need to document the card’s purchase and provide the ID number.
If you have a problem with a gift card, contact the store or financial institution that issued the card. If you can’t solve the problem at that level, you may want to file a complaint with the appropriate authorities. For cards issued by retailers, contact the Federal Trade Commission at www.ftc.gov or call 1-877-FTC-HELP. You may also file a complaint with the Louisiana Attorney General, Consumer Protection Section, P.O. Box 94005, Baton Rouge, La. 70804-9005, 1-800-351-4889.
To address problems with cards issued by national banks contact the Comptroller of the Currency’s Customer Assistance Group by calling 1-800-613-6743 or by sending an e-mail to: email@example.com.
“Shop smart for gift cards,” Tucker says, adding, “To ensure that a recipient receives the card’s full value, buy cards only from reputable retailers – not online auction sites.” Gift cards sold through online auction sites are more likely to be counterfeit or obtained through fraudulent means.
For related family economics and consumer topics, click on the Family and Home link on the LSU AgCenter homepage at www.lsuagcenter.com. For local information and educational programs, contact an extension agent in your parish LSU AgCenter office.
On the Internet: LSU AgCenter: www.lsuagcenter.com.
On the Internet: Federal Trade Commission at www.ftc.gov.
One the Internet: Currency’s Customer Assistance Group: firstname.lastname@example.org.
Contact: Jeanette Tucker (225) 578-5398 or Jtucker@agcenter.lsu.edu.
Editor: Mark Claesgens (225) 578-2939 or email@example.com.