Bankrupt retailers stick you with worthless gift cards
Filed under: Cards, Ripoffs and Scams, Fraud
I first got interested in the issue of companies deciding not to honor gift cards following bankruptcy filings when Bradlees tried to pull that nonsense back in 2000. The company reversed that decision after universal consumer outrage but at the time a spokesman for Eliot Spitzer's office said the company was within its rights:"Everything goes to the bankruptcy court, and there's a process in place for consumers to file a claim."
Now consumers with Sharper Image gift cards are in a similar situation after the company announced that it was suspending the acceptance of gift cards but reassured consumers that "We appreciate your understanding..." I'm sure plenty of customers were less than understanding.
I don't understand the logic behind this. Companies are not allowed to report a profit on the sale of a gift card until the it redeemed for merchandise. I would argue that the gift card money should be held in escrow for the consumers until the sale is made.
Gift cards are a great deal for businesses -- they give the company cash to use/earn interest on before they have to provide anything of value in return. Consumers shouldn't get the shaft when the company files for bankruptcy; they should get their money back before anyone else gets anything.
Now consumers with Sharper Image gift cards are in a similar situation after the company announced that it was suspending the acceptance of gift cards but reassured consumers that "We appreciate your understanding..." I'm sure plenty of customers were less than understanding.
I don't understand the logic behind this. Companies are not allowed to report a profit on the sale of a gift card until the it redeemed for merchandise. I would argue that the gift card money should be held in escrow for the consumers until the sale is made.
Gift cards are a great deal for businesses -- they give the company cash to use/earn interest on before they have to provide anything of value in return. Consumers shouldn't get the shaft when the company files for bankruptcy; they should get their money back before anyone else gets anything.
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Reader Comments (Page 1 of 1)
3-04-2008 @ 11:43AM
vivaldi raget said...
It feels good to bail consumers from a retailer's bankruptcy. But they are creditors similar to everybody else who gets shafted in bankruptcy. Retail bankruptcy is somewhat predictable, almost always happening after the December holiday shopping season. If the gift card is a holiday present, then all should be great if recipient purchases by the first week in January.
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3-04-2008 @ 4:07PM
bunny said...
My husband and I received a Sharper Image giftcard this holiday season and when I went to use it in Feb., I was told it was not valid...... I think we received a "worthless" piece of plastic that cost our relatives $80.......
If Sharper Image does not honor these gift cards [and I am NOT holding my breath that they will honor them]....... I won't shop there and I will be the first [probably NOT the last] to badmouth them any chance I get.......
I don't think this store will recover from reorganization if it does not honor the outstanding giftcards. The people who received them are the people who will keep them in business.......
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