Chicago Bankruptcy Lawyer Blog

June is such an expensive month, don’t you agree? It’s a real budget breaker -- buying presents for weddings, anniversary parties, graduation parties, birthday celebrations and Father’s Day (and may I say, as an aside, that I’m personally relieved that Mother’s Day is celebrated in May when hardly anything else happens and my family can afford to be much more generous!). Not to mention, if you’re anything like me, buying a gift is an exercise in futility – I never know what to buy, no matter how well I know the person.

That’s why I love gift cards so much. It’s just like cash, only less tacky, and the cards themselves are usually so cute and apropos -- a little mortar board and tassel for a graduation, silver rattle for a new born baby, or a rope noose for a wedding. Okay, just kidding on that last one, but wouldn’t that be funny!

Yeah, I love gift cards, giving them and getting them. And I’m not the only one, it seems, more than 50 million Americans purchased a gift card last year, and more than 83% of Americans have used gift cards. Last year, the total value of those gift cards was $26 billion… that’s with a “B.” Interestingly, more than one third of all gift cards are not redeemed – that amounted to $8 billion last year – and goes straight back into the retailer’s pocket, as it were. My Mom is like that; she gets a gift card, sticks it in her wallet and lets it rot. Well, not rot, literally, but gift cards can and do expire, and their value diminishes (thanks to a non-usage fee) after a specific time, getting lower and lower and lower until -- POOF -- it’s evaporated.

Be sure to read the fine print on gift cards; remember, if you don’t use it, you lose it, and the company that issued the gift card – Target, Home Depot, Linens N Things, etc. – gets to keep that money and the merchandise that could have been bought with it. The Federal Office of the Comptroller of the Currency recommends that consumers who plan to buy a gift card be aware of the following before handing that card over to the cashier for activation:

• Applicable fees charged, including those which are assessed after the sale and which may reduce the card value;
• Gift card expiration date;
• Procedures for loss or theft of a gift card;
• Procedures for “problems” arising with use of the gift card; and
• Where the gift card is accepted.

What other “problem” do you think the OCC was referring to? I’ll tell you. It’s the “gift card scam.” Knew that was coming, didn’t ya? Thieves will always find a way. The gift card scam works like this – you walk into a store, grab one of those cute little blank gift cards from the aisle near the register, hand it to the cashier for credit and activation (“Put $50 on that card, will you, please?”), and pay for your purchase. Voila! Mission accomplished: The perfect gift.

Now, what you didn’t know is that the scammers (I'm being kind, they're just thieves, really) grabbed a bunch of those blank cards, hid out in the dressing room for a while where they carefully peeled the cards from the glue dot backing, and copied out the numbers. Then they put the cards back on the rack and waited for someone to buy them. Then, like clockwork, they call the retailer and inquire as to “their” available balance (“Oh, have I still got $50 on that one? Silly me. It must be the other gift card that I used, let me check that one, too”). Once they hear the card has got available credit, off they go to surf the net, where they can use up the entire balance of that card in mere minutes. Voila! Mission accomplished: The perfect crime.

So, how do you protect yourself? Buy a card that’s sealed in cellophane, and that the cashier opens in front of you, or that has an opaque or scratch off coating with a concealed PIN on the back that is removed by the card recipient. What about the gift cards that only the cashier has access to? They might be a tad safer, but only a tad – cashiers get sticky fingers, too, you know.

What’s the ultimate in gift card protection? Buy a gift card online directly from the retailer’s website, and have it e-mailed or snail mailed to the recipient. Or you could buy a bank-issued gift card, which bears a Visa or MasterCard logo; bear in mind, though, bank-issued gift cards usually have higher fees and lots of restrictions.

A lot of people who don’t like gift cards complain that the retailer specific gift cards limit the recipient’s choice, because you have to shop at a specific store. What if you get a gift card for a salon make over, but you need a new air hammer? There’s a remedy for that, too; use a legitimate online gift card service such as www.giftcertificates.com, and buy an “e-SuperCertificate,” which lets the recipient choose from among the hundreds of available retailers.

A final word about using eBay to buy discounted gift cards (i.e. $100 Gift Card for $95 with Buy-it-Now!): Caveat Emptor (so sue me, it was two words). You can’t be 100% certain that you won’t fall victim to a gift card scammer. Granted, there are legitimate sellers who offer an unwanted gift card for sale (I, myself, have done it), but be wary of those sellers who have dozens of them for sale at once. Some have no intention of ever mailing out a gift card, and simply take advantage of the “float” from your payment, until they refund it, which might be weeks later. Read the feedback and note the complaints, even if they’re positive. In simple English: Buyer Beware.

--Debt Diva