Understand Ground Rules For Purchasing And Using Gift Cards

Jeanette A. Tucker, Bollich, Patricia A., Braud, Emily  |  12/7/2006 4:10:21 AM

News You Can Use Distributed 12/06/06

Sixty-six percent of shoppers are planning to purchase a gift card this year, with sales expected to top $55.5 billion. 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.

"Although gift cards may seem to be the perfect gift, they also can come with potential risks and costs," explains LSU AgCenter family economist Dr. Jeanette Tucker. Whether you’re giving or receiving a gift card, Tucker says to remember several tips.

First, familiarize yourself with the different types of gift cards available. "Visa and Master Card gift cards can be used anywhere those cards are accepted, even abroad," Tucker says. "Store cards, on the other hand, must be used at the chain that issued them, though they may be accepted at sibling stores."

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. Tucker advises reading the fine print before you buy and paying special attention to the terms and conditions. If you don’t like them, buy elsewhere.

Also, check the costs associated with the gift card. Store cards sold by retailers are usually issued free of charge. But banks often charge a fee to buy their cards.

Check for expiration dates. "Gift cards aren’t exactly like cash – they usually can’t be used indefinitely," Tucker warns.

Recipients don’t want to put gift cards away and forget them because, if they expire, the entire balance of the card could be lost. 2004 Louisiana legislation prohibits gift cards and gift certificates from having an expiration date that is less than five years from the date of issuance. Any expiration date must appear in capital letters in at least 10-point font on the gift certificate. If there is no expiration date, the card or certificate will be valid until it is redeemed.

"The greatest drawback of gift cards has always been the fees associated with them," Tucker says, but 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." Tucker explains.

Along a similar vein, the U.S. Treasury’s Office of the Comptroller of the Currency, which oversees national banks, recently issued guidelines for national banks that are selling gift cards. The office emphasized 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 Website address.

The economist reminds consumer to make certain that gift cards are used. Consumers fail to use about 10 percent of the money on gift cards.

Report lost or stolen gift cards to the card issuer immediately. Some companies will replace a lost card (for a fee), others may not.

"You’ll likely need to document the card’s purchase and provide the ID number," Tucker says, adding, "It’s a good idea to give the recipient the original receipt to verify the card’s purchase if needed."

If you have a problem with a gift card, Tucker recommends contacting 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 their Web site, or call 1-877-FTC-HELP. You may also file a complaint with the Office of the 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.

"Paying attention to the ground rules of gift card giving can bring joy to both the giver and the recipient," Tucker remarks.

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