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Are gift cards a waste for consumers and retailers?

giftcards122811_optBY BOB HOLT
NEWJERSEYNEWSROOM.COM

Retailers whose fourth quarter bottom lines were less than expected this year are hoping for some extra revenue by consumer redemption of gift cards. But they may be in for a disappointment.

The gift that has increased in popularity over the years is being forgotten more often as well. NPR reports that analyst Brian Riley of the Tower Group has estimated about $41 billion in money spent on gift cards has not been claimed since 2005. USA Today reported that accounting rules say gift card sales don’t count as income for stores until they are actually redeemed.

According to the Wall Street Journal, in a National Retail Federation survey, about 80 percent of respondents expected to buy gift cards this holiday season, while 58 percent of shoppers said their most requested present would be a gift card. The gift card has been the most popular choice for five straight years now.

It helps to choose the right card for your gift recipient. But GiftCardRescue.com sells gift cards people don’t want and allows them to buy others at discounted rates. A company spokesman felt that consumers weren’t redeeming their cards right away due to the Credit Card Accountability Responsibility and Disclosure Act of 2009. According to USA Today, rules now say that expiration dates are limited to five years after purchase, and fees for non-use are prohibited until after the first year.

Forbes reports that any unclaimed credit on a gift card can be regained by the retailer in most states. The Securities and Exchange Commission lets companies take any unused gift-card money as income once they can be sure the card isn’t being redeemed. There is no time restriction.

But some states want companies to give the money to the state after so long to add to their unclaimed-funds accounts. That unclaimed funding often winds up going in suffering state government accounts.

 
Comments (1)
1 Wednesday, 28 December 2011 19:09
Jay Gould
The most interesting part of the gift card story this year, I think, is that the WSJ reported "some states" are demanding that any unspent gift card dollars should be given to them. That is outrageous! If anyone should have a claim on any unspent amount, that should be the cardholder and no one else.

My experience tells me that the vast majority of Americans think that any unspent amount is collected by the retailer whose name is on the card. Well, that is incorrect. All unspent amounts are actually collected by the gift card issuers. http://blog.unibulmerchantservices.com/10-tips-for-buying-and-using-gift-cards

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