Avoid recalled toys, gift card problems

Avoid recalled toys, gift card problems

December 24th, 2010 in Business Around the Region

Q: Each year toys are recalled because of safety issues. How do I avoid recalled toys?

A: The toy industry spends an estimated $300 million a year on safety testing and inspection of toys, and about 3 billion toys are sold in America each year that were manufactured in the previous year.

According to the U.S. Consumer Product Safety Commission, less than 20 percent of recalled toys make it back to the manufacturer for proper disposal or repair.

The hot topic this holiday season for many parents and relatives of children is a trust issue - brands and what toys can I trust? There is plenty of reliable information available about toy recalls, and the BBB urges everyone who will be giving or donating toys this year to take a few minutes and become a safe toy shopper.


• Consumer Products Safety Commission: 800-638-2772

• Toy Industry Association: 888-888-4TOYS

• Mattel: 800-916-4498

• Fisher-Price: 800-991-2444

If your gift list has toys on it, the BBB has the following advice to ensure that the toys you give are safe:

• Find out which toys have been recalled: The CPSC keeps a list of recalled toys on its website at www.cpsc.gov. The Toy Industry Association also provides extensive information on toy safety, and you can scroll through photos of recalled toys in an easy-to-use index on its website: www.toyinfo.org.

• What to do if you have purchased a recalled toy: The CPSC negotiates the specific resolution over a recalled toy with the toy manufacturer -- usually resulting in a refund or an exchange for a different toy. Check with the CPSC website for the specific resolutions for the recalled toy you have purchased. If you purchased the toy from a retailer, try first returning the item to potentially save the time it will take to deal directly with the toy manufacturer. Major toy outlets often have their own return policy for recalled toys.

• Be careful when shopping online: Most large stores are quick to pull recalled products off the shelf, and as a secondary precaution, flag the bar codes so when scanned at checkout the cashier knows to not sell the item.

While online auction sites or bulletin boards may have policies against selling recalled toys, many times toys and other unsafe products are being sold to unsuspecting parents. It is very important to check with the CPSC and the Toy Industry Association before buying a new or used toy or product for children online.

Q What happens to gift cards, warranties and product orders when a store goes out of business after the holidays?

A The holiday shopping season is upon us, and its financial success could make or break some retailers. With more retailers closing stores, or going out of business completely, consumers are confused about what will happen to their outstanding product orders, unused gift cards and extended warranties.

When a retailer files for bankruptcy there are two primary options: Chapter 11 or Chapter 7. Chapter 11 means the company intends to reorganize and continue to do business as usual. However, Chapter 7 means the company will close and liquidate any assets to pay creditors. If a business intends to continue operations under Chapter 11, it will often continue to redeem gift cards, fulfill services and deliver on goods. Some Chapter 11 bankruptcies, however, quickly turn into Chapter 7, and then chances for the consumer to receive any compensation are greatly diminished.

The BBB has the following advice for consumers if a retailer files for Chapter 7 bankruptcy:

• Product orders: Bankruptcy law is specific regarding who will benefit first in the case of a retailer's liquidation. Unfortunately, customers are at the end of the line. Typically, the money gained from selling the company's assets goes to paying back secured creditors and employee wages. Whatever is left over is shared among customers who have outstanding claims for goods and services.

Customers who paid with credit cards may be able to dispute the charge with the credit card company and get their money back. For this reason, BBB highly recommends that consumers pay with credit cards, instead of cash, checks or debit cards. Customers who paid by cash, check or debit card will need to file a claim with the bankruptcy court administering the process. The deadline is typically 90 days after the bankruptcy filing date.

• Warranties: The validity of any outstanding warranties varies for each bankruptcy. If a retailer goes out of business, the consumer may be able to rely on the manufacturer's warranty. If a manufacturer goes out of business, the consumer may be able to rely on any warranties provided by the retailer. Many extended warranties and service plans are provided and administered by third parties and are typically not affected by a retailer or manufacturer going out of business.

• Gift cards: In Chapter 11 bankruptcy, courts will decide if the business must honor gift cards or certificates. If the business has filed Chapter 7 bankruptcy, the gift card holder must file a claim. In some cases, consumers may receive part of the value of the gift card. BBB advises consumers to redeem gift cards soon after receiving to avoid possible problems with the retailer's solvency or reduction in value.

For more information, please visit www.bbb.org.

Get answers to your questions each Friday from Jim Winsett, president and CEO of the Better Business Bureau Inc., which serves Southeast Tennessee and Northwest Georgia. Submit questions to his attention by writing to Business Editor John Vass Jr., Chattanooga Times Free Press, P.O. Box 1447, Chattanooga, TN 37401-1447, or by e-mailing him at jvass@times freepress.com