Winsett: Know rules before buying gift cards

Winsett: Know rules before buying gift cards

October 28th, 2011 by By Jim Winsett in Business Diary

Q: What advice does the BBB have for purchasing gift cards this holiday season?

A: With the holiday season right around the corner and the economy putting the squeeze on budgets, many shoppers are going to be looking for the best gift options this holiday season.

For those looking to give gift cards to family and friends, BBB is recommending that you do your research before purchasing a gift card.

So far, in 2011, BBB already has received more than 440 complaints against the gift card industry, a huge increase from the 33 complaints received in 2010.

In some cases, consumers are disgruntled when they are given an expired gift card with loaded cash that isn't usable until the expiration date is corrected. After sending the expired card in for replacement, some consumers have been left empty-handed when the card company failed to return the card.

First, consumers need to be on the lookout for gift cards that appear to be open or out of their original package. Gift cards state an expiration date; consumers should always review that date.

Shoppers should be wary of online auction sites that promise "full value guaranteed" gift cards. Such sites are prone to selling old, valueless cards that leave the gift giver and receiver disappointed.

BBB recommends the following tips for both givers and receivers of gift cards:

  1. Know the rules. New federal rules that took effect in August 2010 are designed to protect consumers, and will restrict fees and affect gift card expiration dates.

These new rules apply to two types of cards: Retail gift cards, which can only be redeemed at the retailers, and restaurants that sell them. The other is bank gift cards, which carry the logo of a payment card network like American Express, Visa, or MasterCard and can be used wherever the brand is accepted.

  1. Check it out. Make sure you are buying from a known and trusted source. Always check out a business at Avoid online auction sites, because the cards sold there may be counterfeit or may have been obtained fraudulently.

  2. Read the fine print before buying. Is there a fee to buy the card? Are there shipping and handling fees for cards bought by phone or online? Will any fees be deducted from the card after it is purchased?

  3. Inspect the card before buying it. Verify that no protective stickers have been removed, and that the codes on the back of the card have not been scratched off to reveal a PIN number. Report any damaged cards to the store selling the cards.

  4. Provide the receiver with backup. Give the recipient the original receipt in case the card later is lost or stolen. Also, before you buy retail gift cards, consider the financial condition of the retailer or restaurant. A card from a business that files for bankruptcy or goes out of business may be worthless.

If the business closes a store near the recipient, it may be hard to find another location where the card can be used. A business that files for bankruptcy may honor its gift cards, or a competitor may accept the card. Call the business or its competitor to find out if they are redeeming the cards, or if they will do so at a later date.

  1. Treat the gift card like cash. For recipients, it's important to report lost or stolen cards to the issuer immediately. Some issuers will not replace cards that are lost or stolen, while other issuers will, for a fee. Make sure to use gift cards as soon as possible, because it is not unusual to lose or forget about them.

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 Dave Flessner, Chattanooga Times Free Press, P.O. Box 1447, Chattanooga, TN, 37401-1447, or by emailing him at dflessner@